Sept. 7 (Bloomberg) -- Alitalia SpA, Italy's insolvent state- controlled airline, will become a new company on Nov. 1 after a government-backed reorganization, Industry Minister Claudio Scajola said.

``I think the situation is such that this deadline will be respected,'' Scajola said at a conference today in Cernobbio, Italy. ``We need an airline which can be competitive as soon as possible.''

A government rescue plan aims for Rome-based Alitalia to boost revenue and break even in two years, while adding new planes after a group of investors buys its best assets and unprofitable ones are sold. Profitable assets will go into a new company owned by a group of investors led by Piaggio & C. SpA Chairman Roberto Colaninno.

The investors may include between 20 and 25 partners from private industry, Intesa Sanpaolo SpA, the Italian bank advising the government, said yesterday. A possible foreign partner for Alitalia won't be allowed to own a majority stake, the bank said.

The rescue plan, backed by Prime Minister Silvio Berlusconi, comes after union and political opposition prompted Air France-KLM to drop an offer for Alitalia in April.

Union Questions

The government wants unions to accept the restructuring proposals contained in the plan by Sept. 11, before Alitalia runs out of cash. Unions say they don't have enough information from the government to make an informed decision.

``It is not clear yet how many workers will stay, how many will lose their jobs and how many will be reallocated to other posts,'' Guglielmo Epifani head of CGIL, Italy's biggest labor union, told reporters today in Cernobbio. ``I hear numbers ranging from 3,000 to 8,000. So which one is it?'' he said.

Separately, Marco Tronchetti Provera, chairman of Pirelli & C. SpA, Europe's third-largest tire-maker, said today his company may invest between 10 million euros ($14.3 million) and 20 million euros in the new Alitalia.

``We have seen the basic plan and we agree with it,'' Tronchetti told reporters in Cernobbio. ``The rescue plan is valid from an economic standpoint.''

To contact the reporters on this story: Alessandra Migliaccio at amigliaccio@bloomberg.net; Lorenzo Totaro at ltotaro@bloomberg.net.

Last Updated: September 7, 2008 10:26 EDT