Alitalia News

The new owners of Italian airline, Alitalia, are hoping for a more streamlined approach to travel. The private owners, an all-Italian consortium led by the chairman of the scooter manufacturer Piaggio, are still looking for a foreign partner to help the airline turn a profit. It is believed an Air France-KLM board meeting debated an Alitalia merger offer on Friday. Alitalia's board is expected to announce a decision on a part purchase of Alitalia on Monday. While the new privately owned airline officially takes off on Tuesday, some analysts have remained sceptical about whether the restructured Alitalia has a future. Over the years the airline has been bound down with complaints about punctuality, poor in-flight services, lost baggage and unfriendliness to passengers. he airline's name is unchanged. The flight attendants will not be sporting new uniforms. It is not even getting a new logo. But Alitalia's new, private owners - an all-Italian consortium led by the chairman of the scooter manufacturer Piaggio - hope that a streamlined airline, tied to a bigger and stronger foreign partner, will be able to win back passengers and finally turn a profit. The new Alitalia officially takes off Tuesday into Europe's crowded skies, during an aviation crisis that has led other airlines to reduce capacity and routes, or go out of business. Many analysts remain skeptical about whether the restructured Alitalia has a future, at least as an independent airline. "Giving the entity another lease of life - is it sustainable? No, of course not," said Nick Cunningham, an aviation analyst at Evolution Securities in London. "But if you rescue it and merge it with a larger carrier, you can get some sort of value out of the situation." Other experts agree that Alitalia's reincarnation may simply be a way to gain traction before it is merged with one of the bigger European aviation groups, most likely Air France-KLM, which has proposed acquiring a 25 percent stake, reportedly for around €320 million. The Air France-KLM board approved an offer Friday, according to a person close to the company, who declined to comment on the price. The person spoke on condition of anonymity because of the sensitivity of the situation. The offer is being considered by Alitalia's board, which was to announce a decision Monday.

Alitalia crashing after years of inertia By Ben Richardson Business reporter, BBC News Imagine if British Airways forced you to live in London if you wanted to work for the airline.

As crazy as it sounds, that is exactly the sort of rule that was in place at Italian airline Alitalia as recently as 10 years ago. Anyone who wanted to work for the national carrier had to be registered as living in or around Rome, the country's capital and hub of political life. Whole suburbs became dominated by Alitalia workers as they bought up real estate to safeguard their jobs. Today that rule is no longer in place. It was ended in 1998, but not before Alitalia was forced to fly staff from Rome to Milan and back again every day, so it could run its new operations at Milan's Malpensa airport. That whole episode helps to highlight how tightly interwoven Italian politics and society are in the company's past and present, and just how dysfunctional Alitalia is. “ Not a single decision has been taken. They decided not to decide ” Oliviero Bacchelli, Bocconi University Anyone trying to untangle the strands and save the loss-making airline will face a massive task - not least because they have to negotiate with 10 trade unions and allay regional concerns centred on three of Italy's main cities, Rome, Milan and Naples. Air France-KLM is discovering just how tricky getting a deal done can be, and its takeover of Alitalia is hanging in the balance after talks with unions collapsed on Thursday. Analysts say there is scant hope of a resolution in coming days, as Italy will hold a general election in little more than a week - and harsh economic realities and job losses are unlikely to be seen as vote winners. Guilty parties? From the outside, it seems as if Alitalia is simply a victim of bad timing and that once the election is over, a clear path to recovery should be found. But talk to people who have followed the airline closely and they will tell you that the current situation is a culmination of years of bad decisions, management problems, political instability and an unwillingness on all sides to make difficult decisions. "It is not easy to find one guilty person, an executive or politician," says Oliviero Bacchelli of Bocconi University's centre for research into regional transport and tourism. "For 10 years, it was many politicians and many executives. And in the last two-and-a-half years, there has been complete inertia," he explains. "Not a single decision has been taken. They decided not to decide." This inertia has left the company on the verge of collapse. It is losing about $1m (£500,000) a day, and Economy Minister Tommaso Padoa-Schioppa said the only alternative to an Air France-KLM takeover would be to put Alitalia into emergency administration. Flying politics Alitalia's problems came to a head two years ago when a restructuring plan, underpinned by an cash injection of 1bn euros, was scuppered by yet another general election. A change in government led to a change in management, and a decision was taken to privatise Alitalia rather than turn the company around. The Italian government has been trying for more than a year to sell its 49.9% stake, but had put off a number of purchasers by attaching conditions that included maintaining staff levels, not closing lossmaking routes and not eroding Alitalia's national identity. This time they are being more realistic. However, analysts say their window of opportunity may have passed.

The sale of Alitalia has been opposed by prime ministerial candidate Silvio Berlusconi, while other politicians have been hunting high and low for a domestic saviour to step forward and preserve Alitalia. The only point that is not in dispute is that Alitalia is in dire need of an overhaul. Fixing problems At the heart of the business, there is a profitable core, analysts say, pointing out that the routes in and out of northern Italy are some of the most attractive and valuable in Europe. It is just that there is so much other stuff attached to the company that needs to be sorted. Take, for example, the state of its aircraft fleet and maintenance operation. Many of its passenger planes are McDonnell Douglas 80s, which first flew in 1980 and went out of production nine years ago. They are less fuel-efficient than new aircraft, take longer to service, need more regular checks and use more expensive spare parts. At the same time, Alitalia's main maintenance operations are based in Naples, which is not a main airport for the company, so planes need to fly in and out to get serviced. Also, because the company focuses less on the more modern planes, it is almost impossible for them to service the aircraft of other airlines, placing serious limitations on their profitability and efficiency. Little choice These are not isolated problems. Alitalia is riddled with outdated operating methods that have built up, layer upon layer, until the company has all but seized up. The problem facing any potential buyer is how to make cost cuts without alienating and spooking workers who see their jobs as being the only viable option in a country where the economy is creaking and employment is becoming less stable and long-lasting. Yet while their concerns may be understandable, they may have little choice but to bite the bullet, analysts say. Alitalia cannot compete with budget airlines, such as Easyjet and Ryanair, that have criss-crossed Italy with cheap flights and service a number of destinations in the country. Nor can it continue to haemorrhage money and stay open. Experts say the most likely outcome is that Air France-KLM will manage to strike a deal, and Alitalia will be restructured and operated just like any other modern airline. In the meantime, the arguing is set to continue in what has become a singularly Italian business drama. Story from BBC NEWS:

Alitalia seeks bankruptcy measure Troubled Italian airline Alitalia has applied for bankruptcy protection as it tries to agree a deal to ensure its long-term survival. The carrier has sought court protection from its creditors, effectively declaring itself insolvent. An administrator will be appointed to handle the process, with flights continuing while the firm plans a radical overhaul of its operations. Losing 2m euros (£1.6m) a day, Alitalia has survived on a 300m-euro state loan. Plans are being drawn up to split the carrier into two and to sell a stake in a new entity to a foreign airline. Split in two Guaranteeing the airline's future will depend on securing fresh investment and persuading its unions to accept large job cuts.

Both Air France KLM and Lufthansa have expressed interest in investing in any new entity which emerges from the current business. “ No one can buy Alitalia in the state it's in... the business is toast ” Roberto Colaninno Earlier on Friday, Corrado Passera, head of the airline's financial advisers Intesa Sanpaolo, confirmed that Alitalia's board was drawing up a request to seek bankruptcy protection. The move will give the firm breathing space to reach agreement on how the business can proceed. The government adopted new measures on Thursday aimed at speeding up bankruptcy proceedings, widely interpreted as a signal that Alitalia was set for such a course of action. Future plans for the carrier would see it divided in half, with its loss-making operations remaining under bankruptcy protection and potentially being liquidated. Profitable short-haul routes would be separated into a new business, controlled by a consortium of Italian investors including budget airline Air One which would effectively be merged with Alitalia. Italian media have speculated that the new firm will employ 7,000 fewer staff than Alitalia's current 19,000 strong workforce and operate flights to about 50 fewer destinations. Italian ownership Prime Minister Silvio Berlusconi has made Alitalia's continued ownership by Italian interests a precondition of any rescue deal. However, experts have said the airline - of which the government owns 49% - can only survive in the future as part of some European alliance. Previous attempts to sell the business to a foreign airline have foundered over union concerns about job losses and unease over the severity of the airline's financial problems. The airline's perilous position was put into perspective by Roberto Colaninno, appointed to take charge of the new entity that emerges from the restructuring. "No one can buy Alitalia in the state it's in," he told La Repubblica newspaper. "With all respect, I am not Merlin the magician. The business is toast. It doesn't exist any more. There's nothing left." Alitalia has been crippled in recent years by strategic indecision, poor industrial relations and soaring fuel costs. Its shares were suspended earlier this summer while the firm has delayed the release of its 2007 accounts. Story from BBC NEWS:

Troubled Alitalia edges toward bankruptcy Share trading suspended; board calls for an emergency meeting The Associated Press updated 12:58 p.m. ET April 3, 2008

ROME - Alitalia edged closer to bankruptcy protection Thursday after Air France-KLM abruptly broke off talks to buy the struggling national airline, though union leaders said they were open to resuming talks. Even in bankruptcy, the airline could continue flying under the supervision of a government-appointed administrator while it developed a financial reorganization plan.

Alitalia’s board convened an emergency meeting to determine its next step. About 300 employees gathered outside the headquarters, chanting “We want Air France” and demanding the return of chairman Maurizio Prato, who resigned in frustration on Wednesday. The government, meanwhile, said it would try to determine whether there was still a chance to coax Air France-KLM and unions back to the bargaining table. Barring that, analysts said a bankruptcy filing appeared the most likely outcome. Air France-KLM Chairman Jean-Cyril Spinetta — who had made the takeover conditional on the acceptance of Alitalia’s strike-prone unions — called their proposals “incompatible” with plans to return the airline to profitability quickly. Labor leaders said Thursday that the union plans were not final. “We are ready to negotiate. Our proposal was never an ultimatum,” said Roberto Panella, head of the UGL transport union, at a news conference involving eight of Alitalia’s nine unions. “We’ll do everything to avoid bankruptcy protection,” said Fabrizio Solari, head of the FILT-CGIL union. Air France-KLM spokeswoman Veronique Brachet declined to comment on the unions’ calls for talks to resume. Alitalia’s board has few options. It can request bankruptcy protection, or it can try to hold on using its cash reserves — likely selling additional assets — until a new government is in place after parliamentary elections scheduled for April 13-14. In the meantime, it is likely to name a new temporary chairman to replace Prato. Opposition leader and former Premier Silvio Berlusconi, who has been leading in the polls, has said he was gathering investors to make an alternate deal, but hasn’t publicly named them. Some of his remarks have brought the scrutiny of Italy’s stock market regulator. The Milan Stock Exchange suspended Alitalia shares, which had closed Wednesday at 50 euro cents (78 U.S. cents). The stock has swung beyond the exchange’s 10 percent limit in both directions in recent weeks, as the sale has become embroiled in national politics. The Italian government has been trying for 15 months to sell its 49.9 percent stake in Alitalia before the company runs out of cash. Economics Minister Tommaso Padoa-Schioppa said Wednesday that if the Air France-KLM plan failed, bankruptcy would be the only solution. Alitalia is losing nearly $1.6 million a day, and the airline said in February that its cash reserves had dropped to about $282 million, down nearly 40 percent from a month earlier — though it says it has sold assets since then that have boosted its liquidity. Air France-KLM’s offer valued the airline at around $216 million, about 20 percent of the stock market value at the time and much less than expected. Its plan called for layoffs of around 2,100 workers, closing the cargo unit and getting rid of some short-haul aircraft before adding new longer-haul planes. In one of the most opposed measures, Air France-KLM planned to downgrade Milan’s Malpensa airport, using Rome’s Leonardo da Vinci airport as the main southern hub, to complement its hubs in Paris and Amsterdam.

Unions, which have shown little stomach for cuts, would have to go along when bankruptcy becomes an option because the only other alternative would be a complete liquidation, said Oliviero Baccelli, an airline and transport analyst at Milan’s Bocconi University. In the meantime, there is a brief window for reopening talks with Air France-KLM, he said. “It is clear that this must happen in the next 48 hours, otherwise the road to bankruptcy protection already will have been reached,” Baccelli said. Baccelli speculated that Alitalia’s 11,000 employees may see the writing on the wall that Air FranceKLM is Alitalia’s best hope and press their leadership to make concessions. In bankruptcy, an administrator would be named to run Alitalia and the company would be granted protection from its creditors and suppliers — but only under the terms of a business plan guaranteeing the company’s return to profitability with radical restructuring. The plan, which must be written within 180 days, could cover a period of years. © 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

URL: http://www.msnbc.msn.com/id/23933924/ MSN Privacy . Legal © 2009 MSNBC.com The Italian government scrambled for a deal with airline workers on Sunday, negotiating into the night in a bid to save Alitalia from collapse. With Alitalia's operating licence in jeopardy and the likelihood that it will have to ground flights from Monday due to a lack of fuel, the airline's unions faced a stark choice between a rescue plan with job and salary cuts and pushing the carrier into liquidation. Labour Minister Maurizio Sacconi spent the weekend in intense talks with unions and the business consortium that has offered to buy profitable parts of Alitalia, hoping to reach a deal he could announce overnight or early on Monday, a source close to the talks told Reuters. Once a symbol of Italy's post-war boom, Alitalia has for years suffered from political interference, labour disputes, financial woes and most recently from soaring fuel costs -which are weighing on airlines around the world. Britain's third largest package holiday operator, XL Leisure Group, grounded all flights on Friday after going into administration. Discount transatlantic carrier Zoom Airlines began bankruptcy proceedings last month. Unions have so far rejected the consortium's plan to buy the flight operations of Alitalia and relaunch it as a slimmed down regional carrier -- a strategy that would mean thousands of job cuts and reduced salaries. But with liquidation the only obvious alternative, they appealed for a compromise.

"We are trying to get a solution to this saga and there are still many obstacles, but the climate is different and there is the awareness that there is no alternative to the deal," said Giuseppe Caronia, head of the UILT union. "I am moderately and cautiously optimistic." CHECK-IN PROTEST At Rome's Fiumicino airport, several hundred Alitalia workers staged a protest, temporarily blocking passengers' way to check-in desks of various airlines. "Today it's us, tomorrow it will be you," they chanted to employees of other airlines. Italy's civil aviation authority said on Saturday that Alitalia's operating licence was at risk after the airline confirmed media reports that it was having trouble buying jet fuel from wary suppliers. Alitalia is operating under a bankruptcy commissioner who has said the only alternative to the rescue plan is liquidation, a procedure he has held back from starting while talks go on. An Alitalia collapse would be a huge political blow for Prime Minister Silvio Berlusconi who promised voters he would use his business contacts to find it an Italian buyer. La Stampa daily said there was a "firm belief that a collapse would be a serious blow not only for the government but also for unions, workers, employers and, in fact, the entire country". The investor group CAI has said publicly it would not give any more concessions but La Repubblica said CEO Roberto Colaninno had improved his offer on salaries, reducing pay cuts to 20 percent, from around 25 percent. In April, Alitalia's unions sank a deal agreed under the previous, centre-left, government to sell the airline to Air France-KLM , a deal that Berlusconi, then in opposition, said he would block if he came into power. The state holds a 49.9 percent stake in the airline and its publicly traded shares have been suspended since June. Alitalia has not been profitable since 1999 and had nearly 1.2 billion euros ($1.68 billion) of debt as of July.

70 Rome flights canceled by protest Updated 1/8/2009 2:24 PM | Comment

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ROME (AP) — At least 70 flights at Rome's main Leonardo da Vinci airport were canceled Wednesday by a ground workers protest agai imminent relaunch.

The new, streamlined Alitalia is to start operations next week. The new airline merges the profitable assets of the bankrupt national carrie include a foreign partner.

Airport officials said the protest by baggage handlers, check-in personnel and other ground staff had forced the cancellation of dozens of Italian media reported that some 400 workers participated in the protest, reportedly upset that some of them have not been offered jobs

The new Alitalia will employ 12,500 people — down from 20,000. Some 3,250 workers are being offered government guarantees of up to others were on short-term contracts that are not being renewed.

The Italian government is in the process of privatizing Alitalia, and Air France is seen as a possible acquirer. The Alitalia sale began in late December. Italy's Economy and Finance Ministry invited bids to purchase at least 30.1% of Alitalia, with the deadline for offers set for Jan. 29. The Italian government currently owns 49.9% of the carrier's shares and is seeking to dilute its stake to 19% and cede management control. It has not ruled out selling all of its shares. President Romano Prodi is hoping investors will succeed in reviving the unprofitable company after several injections of state aid failed to do so. Air France holds a 2% Alitalia stake. However, it has remained cautious on a tie-up, probably because the Italians are insistent that any buyer will have to keep a stake of at least 30.1% in Alitalia until they met the targets of their industrial plan and also must maintain the carrier's "national identity." Roughly translated, that means a ban on job cuts among the firm's 18,000 staff and on sweeping changes to existing flight schedules. Air France has already said any relationship would be conditional on an Alitalia restructuring. The resignation of Spinetta weakens the board of the Italian airline and is a "personal setback", Italian infrastructure minister Antonio Di Pietro said Wednesday. He added that the departure "weakens the board when it should be working flat out," to prepare the airline for its privatization. Alitalia lost 221.5 million euros ($292.0 million) in the first half of this year, up from 124.7 million euros ($164.2 million) for the similar period in 2005. It expects 2006 losses to exceed $400 million, the Finance Ministry has said.