 Italy's outgoing Treasury Minister, Tommaso Padoa-Schioppa, has warned Italy's unions that Alitalia risks "irreparable consequences" if attempts are not made quickly to heal a breakdown in buy-out talks with Air France-KLM. The Italian treasury owns 49.5% of Alitalia and had decided to sell its stake to Air France but that company's restructuring plan has been opposed by the eight unions involved in the negotiations and which broke down last Wednesday evening.
Padoa-Schioppa's harsh words, taken by some as an ultimatum, came on the eve of a meeting of the Air France-KLM board of directors which is expected to discuss the situation. At the same time, Alitalia is reportedly quickly running out of cash - at the end of February is reportedly had only $282 million left in cash and short-term credit lines - and according to Padoa-Schioppa bankruptcy is just around the corner. Not all experts believe that bankruptcy would be such a disaster. Under Italian bankruptcy law, the government can appoint a sole commissioner with authority to turn a company around -- which would leave the next government facing the difficult question of job cuts. According to economist France de Benedetti, "commissariamento" would make it easier to distinguish between politics and the real value of the company which after all does have an important brand, broad professionalism and significant commercial ties with travel agencies and could even put an end to the extremist trade unionism which has done so much to damage the company and thus, ultimately, the workers themselves. You can bet that if commissariamento takes place deep job cuts will be inevitable. On the other hand, de Benedetti said, the repeated appeals to some more or less imaginary group of Italianwhite knight investors by former prime minister Silvio Berlusconi, who is again running for that office the Italian elections scheduled for next week, have done little more than offer the unions an excuse to postpone the difficult decisions that the airline needs, which include cutting a significant number of jobs and making sure salaries and work schedules are in line with that of competitors. For example, in an article published in Il Sole 24 Ore (my former employer), Gianni Dragoni quote statistics compiled by the European Air Carrier Association, to point out that in 2005 Alitalia pilot flew 14% fewer hours than pilots working for Air France,Lufthansa or Iberia. That year Alitalia pilots averaged 580 hours each compared to 628 for Air France pilots, 644 for Iberia pilots and 674 for Lufthansa pilots. The 2006 data for Alitalia pilots was not available, Dragoni wrote, but hours flown by the other pilots had increased 641 ore for Air France and 650 for both Iberia and Lufthansa. And talking about Air France as a colonizer of Italy has also not been useful. Indeed, last week the Wall Street Journal criticized Berlusconi sharply for his role in the Alitalia affair. An editorial titled Air Silvio said "It's rare for a politician to spark a serious crisis before he's even won office. That's what Silvio Berlusconi has done with Alitalia. If, as expected, he wins a third term as Prime Minister next weekend, Mr. Berlusconi will deserve every headache Italy's flag carrier brings him". |
