(Updates with S&P downgrade of IFIL in final paragraph)
By Sabina Suzzi
SIENA, Italy, June 30 (Reuters) - Fiat should sign off the sale of aviation unit Fiat Avio "in hours," Chairman Umberto Agnelli said on Monday, and praised a business plan that will use the sale money to help revive Fiat's historic car arm.
Fiat agreed to sell Fiat Avio to private equity fund Carlyle and Italian defence group Finmeccanica in April but a deal has been long in coming with reported quibbles over the price, now likely to be slightly under 1.6 billion euros.
Agnelli had originally expected to seal the sale of Fiat's most profitable unit by the end of May.
"First I told you all it was a matter of weeks, then that it would be last weekend but now it is a matter of hours," Agnelli told reporters.
Fiat sold a spate of assets last year, including shares in partner General Motors Corp , to help slash debt.
But seven billion euros raised from this year's sales -- client financing unit Fidis, insurer Toro and Avio -- will feed into a 19.5 billion-euro restructuring aimed at returning Fiat to net profit by 2006 from 2002's record 4.3 billion euro loss.
Analysts criticized the revival plan, unveiled last week by new Chief Executive Giuseppe Morchio, for not doing enough to chop costs at core but cash-bleeding car arm Fiat Auto and for failing to improve its 70 percent capacity levels in Italy.
Under the plan, Fiat will raise another 1.8 billion euros in a capital increase due to run in July, shut 12 factories and chop a net of 6,900 jobs. Its main shareholders Ifil and Ifi will also carry out capital increases.
"It is not a revolutionary plan but it's what Fiat needs -- like a good father giving good advice to his family," said Agnelli, who is now head of the family which founded Fiat 104 years ago and still owns about a third of the company via Ifil.
"We have made some drastic decisions in the last four months to focus on the most important sector -- cars," Agnelli added, referring to the Fiat Avio and Toro sales.
Fiat shares have fallen since the plan was announced. On Monday, Fiat dropped another 2.8 percent to 6.33 euros, still well above the capital increase issue price of five euros, against a rise in other European auto stocks .
Ifil dropped 3.27 percent to 2.04 euros after tumbling as much as 15 percent on Friday. Traders said the Ifil capital increase price of 1.30 euros per share was too high and there was little appetite for the stock.
Agency Standard & Poor's said after the market close it had cut IFIL's long-term and short-term ratings to "A-" from "A" and to "A-2" from "A-1," respectively, and said the outlook was negative.
Standard & Poor's blamed the downgrade on IFIL's decision to subscribe to Fiat's 1.8 billion euro capital increase.