Air France-KLM Pulls Offer for Alitalia

Air France-KLM has withdrawn its offer to buy Alitalia, leaving the cash-poor Italian carrier with few options. In a tersely worded statement, the world's largest airline said its Alitalia overture—which had been opposed by Alitalia's unions—was "no longer valid." With no suitors forthcoming and cash reserves dwindling—the airline loses $1.6 million a day—Alitalia may be forced to declare bankruptcy, writes the Wall Street Journal.

The withdrawal of Air France's offer calls the bluff of Prime Minister-elect Silvio Berlusconi, who had threatened to block the sale during the Italian election campaign. The collapse of Italy's national carrier would be a political nightmare for Berlusconi's center-right political alliance. About 18,000 people work for the airline, of which the government owns a 49.9% stake. (More Alitalia stories.)