Friday,
August 31, 2007
Ailing Alitalia
Facing Difficult Options
The
ANNOTICO Report
Alitalia, is now hemorrhaging two
million euros a day, a total in net losses of three billion euros between
1999-2006.
Terms
of the potential sale came with so many strings attached that, one-by-one, all
potential buyers (from US private equity fund Texas Pacific to Russian carrier
Aeroflot to upstart Italian airline Air One) ducked out of the bidding.
The
two big obstacles are:
(1)
to reinstate
(2)
the reaction from the unions, who in the past have launched
repeated strikes at any threat of job cuts or reductions of their generous
benefits.
Time
Magazine
By
Jeff Israely
Friday,
August. 31, 2007
Two
million euros a day. That's the amount of money
Now, with that
"two-million-euro-a-day" figure (which
equals about $2.7 million a day) still buzzing in the ears of government
officials, investors and ordinary Italians, Alitalia
is making its next move to stave off collapse. On Sep. 7, Alitalia's
board is expected to finalize the details of what it is billing as a
"survival/transition" plan for 2008-2010. Cynics will liken it to the
allotment of a few fire extinguishers for the
Hindenburg. Union officials have said that the plan calls for the company to
try raise up to 1.5 billion euros in capital, cut some
1,000 of its 18,000 jobs, eliminate several of its more unprofitable routes and
retire more than a dozen of its aircraft. Amidst often clashing pressures from
the industry, unions and
As a reminder of
how every step Alitalia takes comes loaded with
political implications, the plan is also expected to reinstate
Still, the plan
hammered out by Maurizio Prato, Alitalia's third
chairman in the past year, may contain a corporate logic that goes beyond all
the apparent wheel-spinning. The company, no one doubts, must be sold. The
5,000-pound vulture in the room is named Air France-KLM, which sat out this
past year's round of bidding. Alitalia's initial cuts
(modest as they are) to both personnel and fleet, its search for some
hanging-on cash, and above all its shifting its hub southward all make it a
more attractive regional partner for Air France following its merger with Dutch
carrier KLM. It may turn out that playing hard-to-get will pay off for the
French, as the Italians grow more desperate every day.
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