Rome bus company ATAC is on the verge of bankruptcy according to a confidential letter sent by its chief Roberto Diacetti to mayor Ignazio Marino, reports Italian newspaper La Repubblica.

Diacetti said the company is in serious debt and that from September it will have difficulty paying the salaries of its 12,000 employees. The ATAC boss appealed for drastic intervention from the capital – the sole shareholder – to keep the company from failing.

Underlining the gravity of the situation, Diacetti said that the company is faced with either laying off 1,000 workers or resorting to issuing solidarity contracts. Diacetti writes in the letter  that ATAC owes €400 million to its suppliers, and the same again to the banks, while the company has received loans of over half a billion from the city.

From September ATAC will have no funds, says the letter and the banks – who have refused the company's proposed debt restructuring plan – are not willling to advance further credit. Diacetti points out to Marino that the next few weeks are crucial to the survival of ATAC and has requested a reply from the mayor within 15 days.

Marino's predecessor Gianni Alemanno repeatedly ignored warnings from ATAC during the last eight months of his administration, according to La Repubblica. The troubled company spends €550 million in annual wages – of which €14 million goes to its 82 managers – and has been hit by a series of strikes, three alone during the month of June.

Resolving the company's solvency situation is likely to be the first major challenge faced by Marino, not to mention his newly-installed transport councillor Guido Improta.