Friday, July 04, 2008

Berlusconi's Bailout of Alitalia Shunned by Italians.

The ANNOTICO Report


About three-quarters of Italians disapprove of the government's proposed 300 million, or $473 million, bailout for the carrier, despite pleas of Patriotism from  Berlusconi.  Italians are tired of Labor Unions bloated number of, and  overpaid employees, and Politicians using airline as source of Patronage.  Italians also view Berlusconi's plan as a "sweetheart" givewaway.

 

The answer would seem to be that Alitalia declare Bankruptcy, and if necessary Shut down Operations, then Sell the Assets to an Italian  Private Operator under Conditions that would always reflect favorably on Italy, New  more reasonable Union Contracts can be Negotiated, with all Airline Employees Re applying, culling out the unnecessary and shirkers.

 

Generally, I am Pro -Union, but  when they defend indolent employees, and extort unreasonable wage and hiring levels, and make a profit impossible, and "over play " their hand,  then they cut their own throat.  

 

Italians Shun Alitalia, Ignoring Berlusconi Plea for Patriotism

 

International Hrald Tribune

From Boomberg News
By Marco Bertacche

July 4, 2008

Lorenzo Schapira tries to avoid flying Italy's near-bankrupt flagship carrier, Alitalia SpA. The planes are run-down and the service is ``appalling,'' he says.

``The government should let Alitalia go bust,'' a 52-year- old who runs a disco and a sports club near Milan, said on board an Air One SpA flight home from Rome.

He's not alone. Travelers interviewed last week at Milan's Linate and Rome's Fiumicino airports said they'd given up on Alitalia and politicians should too. About three-quarters of Italians disapprove of the government's 300 million-euro ($473 million) bailout for the carrier, according to a June 5 online poll published by daily newspaper Corriere della Sera.

``Airlines go bankrupt all over the world,'' said Alessandro Rovere, who works in the computer industry in Milan. ``I don't see why Italy shouldn't do the same for Alitalia.''

State-controlled Alitalia posts losses of about 3 million euros a day. No buyer has surfaced for the carrier since Prime Minister Silvio Berlusconi said during his election campaign in April that a ``huge'' number of buyers had answered his appeal to keep Alitalia in Italian hands.

It's ``a question not only of pride but of national security,'' he said April 9 on RAI state radio in Rome.

The emergency loan, the equivalent of more than 5 euros per taxpayer, is buying little more than three month's worth of oil.

``I hoped Berlusconi would stop pouring money into Alitalia,'' said Sara Chiappara, 33, a textbook editor for a Milan publisher. ``It's unbelievable. We've done our part for Alitalia. It's enough.''

`Last Chance'

Alitalia Chairman Aristide Police told shareholders on June 28 in Rome that the airline faces its ``last chance'' to avoid bankruptcy. The stock lost almost half of its value this year before it was suspended June 4 pending a sale.

The government has given Intesa Sanpaolo SpA, Italy's second-biggest bank, until the end of July to come up with a plan to improve the airline's finances.

Former Chairman Maurizio Prato told labor unions the only thing that could save the airline was an ``exorcist'' after worker opposition to job cuts scuttled takeover talks with Air France-KLM Group in April.

Even Alitalia's largest labor union, Filt-Cgil, says the current bailout is useless without clear measures to boost market share and make money. Italy has injected about 3 billion euros into Alitalia in the past decade.

`Drop in Ocean'

``The emergency loan is like a drop in the ocean of Alitalia's losses without a relaunch plan,'' said Mauro Rossi, Filt-Cgil's national secretary. ``Alitalia has always been used and abused by politicians for electoral purposes.''

Airlines around the world are struggling to cope with oil prices above $140 a barrel. At least 24 airlines, including Silverjet Plc of the U.K., have failed this year. Carriers such as United Airlines and Ryanair Holdings Plc are cutting back capacity.

In Italy, consumers are abandoning Alitalia in spite of a new advertising slogan that tries to make using the carrier a patriotic act: ``Flying Alitalia Makes Italy Fly.''

``People think the company has no future,'' said Emanuele Marella, 37, a cheesemaker in Rome. He said he chose Air One because when he booked the night before he paid only 130 euros for a flight to Milan, compared with the 300 euros quoted by Alitalia. ``They need to act quickly.''

Rome-based Air One, owned by Italian entrepreneur Carlo Toto, controlled 37 percent of the Italian market in 2007.

`If or When'

Elio Lannutti, head of Italian consumer association Adusbef and an opposition-party senator, said people lack confidence in Alitalia.

You ``don't know if or when you'll get to your destination,'' he said. ``There are structural problems with the airline and you can't resolve them with national pride.''

Bookings at Alitalia dropped 20 percent when the talks with Air France-KLM failed. Traffic plunged 26 percent in April, according to the Association of European Airlines. Alitalia said the decline was worse than expected after taking into account flight reductions.

Alitalia has said that bookings have recovered, and that it was more punctual and canceled fewer flights than its bigger European rivals. Management has strived to ``guarantee, even in such a difficult context, the airline's operations and an improved service,'' Chairman Police said last week.

Yesterday, Italian Industry Minister Claudio Scajola said the government would stand by Alitalia while seeking a buyer.

An ``important country like Italy can't do without a flagship carrier that can compete in international markets, safeguarding national interest, especially for a country where tourism is so important,'' he said.

Complaints about Alitalia often center on the company's aging aircraft, half of which are MD-80 jetliners, a model that hasn't been produced since 1999.

Self-Reclining Seats

An Alitalia official said the company wouldn't comment on its airplanes. The carrier said in 2006 that MD-80s are among the safest planes in the world. Other airlines, including Iberia Lineas Aereas de Espana SA and SAS Group's Scandinavian Airlines, also fly them.

Alitalia's fleet, including regional and low-cost units, had an average age of 12.4 years at the end of 2007, compared with 8.8 years for Paris-based Air France.

``Last time I flew Alitalia for a flight to Berlin the plane was decrepit and seats reclined by themselves,'' Rita Perrone, a tax collector living in Brindisi, said as she prepared to board a flight operated by Air One.

Marco Bertacche in Milan at mbertacche@bloomberg.net.

 

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