With it's geographic position, worldwide reputation for design, fashion and food, I've always been surprised that the Italians haven't been able to build a world beating airline around their position.
Yes but name me one Italian multinational apart from Fiat (some would dispute even that one)? The problem with the Italian economy in general is that they lack big multinational corps that form the basis of an airline's business travel (look at what happened to Air Canada when Nortel dropped off the face of the earth).
It is one of the big differences with France, which shares its high union membership and reluctance to change but has Total, BNP Paribas, Michelin etc,