Alitalia down to 20 days, Pilots don't rule out strike action.
Business/Finance News
08/24/2004 12:16:36 EST CORRADO GIAMBALVO/AP Photo
Alitalia Chief Says Time Is Running Out
ROME - State carrier Alitalia could be faced with collapse within 20
days without the approval a restructuring plan that would allow the
airline to tap into a loan of 400 million euros ($488 million), the
company's chairman was quoted as saying in Italian news reports
Tuesday.
The reports sent Alitalia shares tumbling 4.7 percent Tuesday on the
Milan market.
In comments reported by Corriere della Sera, Alitalia Chairman and
Chief Executive Giancarlo Cimoli told unions that if they didn't
approve the restructuring plan, "Alitalia has 20 days of life left."
According to Corriere and financial daily Il Sole 24-Ore, Cimoli
also said Alitalia's revenues for July and August were 17 million
euros ($20.6 million) lower than expected, while passenger yields
fell 2.5 percent in the first five months of the year.
Alitalia's costs for carrying each passenger are 60 percent higher
than those for budget airline Ryanair, based in Dublin, Ireland,
according to the reports. Cimoli also blamed the poor results on a
11.5 percent absentee rates among company employees.
In July, the European Commission approved Italy's 400 million euro
rescue loan to cash-strapped Alitalia, saying more than 30,000 jobs
were dependent on keeping the airline flying. The Commission said
the loan should be limited to what was needed, while Alitalia drew
up a liquidation or restructuring plan.
Alitalia management is expected to hold contract talks with
employees this week, and Cimoli met with union leaders Monday to
discuss the issue.
"We hope to avoid a serious clash," said Fabio Berti, head of the
pilots' union, told Dow Jones Newswires, but added that his group
was willing to go on strike if necessary.
Alitalia has been struggling to stay aloft amid competition from
discount carriers and consolidation among the big players. The
airline, which is 62 percent-owned by the state, last achieved an
operating profit in 1998.
Earlier this month, the European Commission criticized Italy for
using decades-old bilateral treaties to order European airlines to
stop undercutting Alitalia on long-haul flights originating in Rome.