Alitalia (Merged)

[Otterman]

I-Ford you are reacting exactly like the little boy I mentioned in my first post on this subject.

I participate in this forum because of the anonymity that it offers. If you read my posts you will be able to figure who I work for, but it is totally irrelevant to what is happening in the banana republic that Italy has become in the last sixty years. Italy has been giving the middle finger to the rest of Europe for much too long and it is time for an accounting. The Alitalia “rescue” should be investigated to the fullest extent possible, there is no way that any business man worth his salt would invest in an company like Alitalia. It is a bottomless pit, with a lousy reputation, employees unwilling to do what is required to compete in the modern world. Even modest measures (as proposed by Air France, result in a tantrum). It all adds up to an impossible future. I find it offensive that you find this to be okay. If you fly for them, I feel for you, but you can’t be proud of working for such an outfit. I understand your anxiety in being confronted by losing your job, but that does not make it right. Sabena, SWISSAIR, or the great number of airlines who have gone or been severely restructured also had righteous people working for them. Enough is enough!

[EAM]

@ Otterman, I think you are missing the point in the whole thing.
NOONE will invest in Alitalia, a compleatly new company will be created. Its more or less the same like with Swissair or Sabena, they transferred everything in Crossair and DAT, here everything will be transferred in a new company.
This has been done before and will be done again.

I agree with you, that Alitalia should have been bankruped many years before, while other ital. airlines went bust, Alitalia received a lot of money from the gov. ... not realy fair.
Anyway, we are talking about 18.000 jobs from which more than 15.000 will be saved. Also, think about the situation if Alitalia stopps tomorrow, who will provide the sevice for the domestic routes? I dont think that easyjet will start flying from AHO, CAG,BLQ, etc to FCO or MXP.

What would you say if BA, AF or LH goes bust tomorrow, more than 20.000 people lossing their jobs and the gov. just says "Well, thats life!"

Anyway, all this should have been done 4-5 years ago, but we also know why it hasn´t.

And just a last thing, AF received a lot of money from the gov. in the nineties, while companies like AOM, AirLib etc went bust. The french gov. setup this big company of AF which is now able to buy KLM, Alitalia etc. and they got much more money from the gov. than Alitalia did.

[pee]

NO-ONE will invest in Alitalia, a compleatly new company will be created

Oh, what a cool thing! To create a "new" company that will have

• the same widely known brand name
• the best routes of old Alitalia
• the best customers
• the best planes
• the best personnel
• the best "old" deals
• the vast amount of "new" money

...but no obligations and no debts! A miracle! While many else will have to continue without any reliefs, aids and concessions. Is it fair?

[EAM]

Oh, what a cool thing! To create a "new" company that will have

* the same widely known brand name
No, it will of course have a new name, anyway I dont think the name Alitalia has a very good reputation now.
* the best routes of old Alitalia
any airline can fly where they want to
* the best customers
I think AZ lost many customers in the last few month
* the best planes
yes, they will keep all the MD80 and 767
* the best personnel
if there are any in AZ, why not
* the best "old" deals
like what?
* the vast amount of "new" money
yes

...but no obligations and no debts! A miracle!
absolutly

The same has been done with Swissair and Sabena.
If you dont like it, what would YOU do? AZ going bankrupt and thats it?
No new airline and 18.000 people without job?
I dont realy get your piont on all this, what is it that you dont like?
And dont say its all the money that AZ is getting from the gov all flaggcarriers in the EU received a lot of money from their gov.

[pee]

Don't you think such a solution would trick/mislead the competition? And do you really think the 18.000 people would not be able to find a comparable job? The economy doesn't recognize any "vacuum" or emptiness, the capacity would be filled very soon. The ache point here is the "national" versus "international" character of the airline(s) to serve Italy, that seems to hurt Berlusconi&Co. most of all.

[EAM]

But the competition is there, at least in some way, it is not that Alitalia just creates a new company, is compleatly different, the Banca Intesa and some others take the opportunity to create a new airline, because Alitalia will go bankrupt, in anyway. So of course they take the best part of Alitalia for the new company. This will not be a "new alitalia" dont forgett within all this is also AirOne which wanted to bit for AZ as well.

So instead of just waiting to the end of AZ, they are working with them to do something new and dont forgett, this is also to save as many jobs as possible
and isnt this what we all should care about?
And what is bad to find a national solution, how would you like it, if Lufthansa replaces Finnair, SAS or what ever and gives a **** about the "national" character.

[pee]

And what is bad to find a national solution, how would you like it, if Lufthansa replaces Finnair, SAS or what ever and gives a **** about the "national" character.

Sincerely I'm pretty happy about Finnair as long as it has a more or less balanced economy. But if I had to pay any debts of so-called "national carrier" or back it up as a taxpayer (I happen to be a Finnish taxpayer), I'd say no. After all, we do have a common Europe, don't we? If O'Leary or Harrison sells me tickets for a quarter of the price I used to pay before and doesn't make losses, why not choose him and his carrier, as long as his planes are safe (and, of course, if the choice of routes is decent and the quality of services acceptable). Or while Luftansa is efficient and reliable, why not travel with them? Is it an Irish, Italian, German, Finnish or multinational carrier - does it matter that much? Or are we still involved in old tribe fights and nationalist thinking across the Union/Europe as it used to be before?

[groundhand]

EAM, the problem is that any 'new' operation (ie with €1bn state subsidy as the Italian government will allow the investment as 'tax deductible' to the 'investors') that takes over Alitalia staff will have the same union issues as before.

Many countries have, over the last 20 years or so, made political decisions to save face with their 'national' airline. Sabena, Swissair, Air France, KLM - even BA when they were privatised had a load of debt removed from the balance sheet to name a few; never mind the protectionism across the pond. The fact it has happened does not make it right. However, Alitalia has had more money 'invested' and thrown at than any other European airline; it is time to stop.

You question whether or not 18000 jobs should be allowed to go - the answer, in the short term, however painful, is YES. It is the ONLY way to solve the long standing problem. The current Alitalia could/should operate with between 7-8000 employees; it could have operated the same routes as at present, the same engineering subsiduary and the same ground handling but their current labour contracts are from the ark.

The thought that the new company will be saddled with 15000 of the current (and no doubt most expensive) employees with a reduced flight schedule and with all the inherent inefficiencies leads to just one conclusion.

Unless any 'new' company can start from day 1 with completely new employment contracts and 2008 staffing levels, comparable with levels in the more efficient operators, then the 'new' airline is doomed. In the time frames being talked about this is highly unlikely.

As for your comment that 'anyone' can start operating internally within Italy - err, no. Just try it. Just try, as a non-Italian company, getting a licence to offer ground handling, or catering, or engineering services; never mind trying to have a foreign owned airline operating internally within Italy. The red tape and state induced paralysis is an art form.

Running a major company requires major decisions; sadly the Italian management will continue to wave their arms around and all talk at the same time but get absolutely NOTHING done.

Take the short term pain to get a long term solution.
It won't happen because of the Italian macho - but it should happen.

GH

[VAFFPAX]

Originally Posted by EAM

The same has been done with Swissair and Sabena.
If you dont like it, what would YOU do? AZ going bankrupt and thats it?
No new airline and 18.000 people without job?
I dont realy get your piont on all this, what is it that you dont like?
And dont say its all the money that AZ is getting from the gov all flaggcarriers in the EU received a lot of money from their gov.

Sabena and Swissair were different. Sabena went bust. SB Airholding/Brussels was started with a lot of money from banks, and expanded by merging Virgin Express with the new airline. SRB still owns 30% of the current entity thanks to this merger.

Swissair went bust, yes. Swiss was once Crossair, a Euro subsidiary of Swissair, so transferring airline stock and rights was easily possible. Again, here several banks clubbed together to put together a rescue package worth around $700 million. The Swiss government did NOT get involved.

The 18,000 people would have perhaps still had a job if Berlusconi hadn't been as obstinate as he is, and had accepted the AirFranceKLM rescue deal. A lot of the fluff would've had to go, but it would've been less painful. Besides, AirOne and others would've been able to absorb some of the detritus. But - why did the AFKLM deal die? Because the unions wouldn't budge. Now they're up the creek without a paddle anyway.

As for your assertion that ALL carriers in Europe received state aid, that is true in certain aspects. But NONE of them have received as extensive state aid as AZ has in the last few years. In some cases the governments provided insurance guarantees (post 9/11), in others loans were made that had to be repaid (and were). But none have had 300 million Euro handed to them, ostensibly as a state loan, only for the government to then 'write it off' by letting AZ go bust.

S.

[EAM]

No we are not, but again, this is not to create a "new alitalia".

LH, BA, AF etc would not care so much about the national jobs.....want an example, you have it, take Nokia in Bochum/Germany, because they can make more profit in Rumania they closed the factory in Bochum which made profit!!! and more than 2000 people lost their jobs.

So after it was not possible to find a new investor for Alitalia, it was AF at the end who decided not to take over AZ, Banca Intesa jumps in and take the chance, the money doesnt come from the gov. it comes from other investors.

So if you think this plan is not good, then again, what would you do?

BTW I am not even italian, I just work in Italy.

SB Airholding/Brussels was started with a lot of money from banks, and expanded by merging Virgin Express with the new airline. SRB still owns 30% of the current entity thanks to this merger.

And this is exactly the same what will happen with Alitalia and of course the gov has to be involved, because they still own 49% of the company, so how could they not be involved???

Of course Swissair was different, because due to SR AOM, AirLiberte, Volare, Sabena and Sobelair went bust as well and LTU ist still struggeling due to this, you are right, this was compleatly different.

'write it off' by letting AZ go bust

it will, this is what you still dont understand, AZ will go bust, the first step is done.

[VAFFPAX]

Well, the writeoff is why people are getting annoyed. Ultimately, whichever way you swing it, Alitalia got what is considered by many in the industry as illegal state aid. 300 million Euros is a LOT of money, and the deal that AFKLM came up with was a frank assessment of what Alitalia is really worth with all its debts, liabilities, the unions, the aging fleet, everything. They should've taken Alitalia management's advice, which was "please let's merge with AFKLM, get rid of the baggage and try again".

As I pointed out before, AFKLM walked away, yes. They walked away because the unions wouldn't budge. And as groundhand points out, sometimes you have to start fresh, getting rid of as much as possible of the old to make a new start to make it all work again.

The government as a 49% stakeholder could have done earlier what was necessary - negotiate a deal with AFKLM, take the offer on the table, or let the airline go bust BEFORE spending another 300 million of money that could've been used better elsewhere, like the German state government (not federal) did for the Nokia factory in Bochum. People were retrained, found new jobs for, relocated, and given financial assistance. There were very few people left stranded afterwards.

S.

[Otterman]

EAM, you are dealing in absolute semantics. Same planes, same people (slightly less), same routes, same everything. This is done at a time where we are at the start of a huge downturn in our business cycle. It has no chance of legitimately succeeding. It is just taking them to the next, final, really final, oh maybe final last chance in a few years time.

Yes, they should be shut down, and as stated any vacuum will be filled. Initially by extra uplift into the legitimate hubs of Lufthansa, BA, Air France/KLM, etc. And in the end a new entity will be brought forward. What would I say if Air France/KLM or Lufthansa would go bankrupt, easy same thing. Is Alitalia special? No it is not. A lot more illustrious airlines have gone the way of the dodo bird. Airlines a lot bigger than Alitalia. The list is long, how about PanAm, TWA, Eastern (keep adding on to it at your own leisure). Companies like KLM (partially due to their fiasco with Alitalia, costing them 280 million Euros) and Northwest Airlines have lost or are about to lose their independence, an option sabotaged by the employees at Alitalia. These are hard choices, but they are the right ones if you pretend to compete in a capitalistic model. I would not care if this was happening in a vacuum, but it is not. This turd mangling is distorting the playing field, and harming the remaining legitimate players, and in the end putting a lot more jobs at risk than the 18,000 that would have gone if the life support would have been turned off at Alitalia. So this effects many participants on the pprune forums, even though they might think it does not.

Are you saying that the Alitalia employees have a greater right to a job, compared to the tens of thousands who are, or are about to be made redundant worldwide at airlines who are doing the hard things to survive?

[pee]

It looks likely that Berlusconi's masterplan to rescue Alitalia will be accepted without any intervention of the European Commission.

Antonio Tajani, the EU transport commissioner nominated by Silvio Berlusconi in June, has publicly backed the operation, which involves merging Alitalia with Air One, Italy's second biggest airline.
(...)
But Brussels officials dealing with the merger showed much less enthusiasm towards the rescue plan. "It is very tricky," said a transport expert at the Commission.

The Italian government decided to freeze national competition rules to allow the merger to take place. According to the plan, the merged company will be split in two, with a so-called 'bad company' acquiring all the debts of the buried Alitalia, which could then be paid back by the Italian State. The main assets, air slots and employees will be absorbed by the other company.

However, (...) Brussels is still evaluating whether it has competence concerning the planned merger between Alitalia and Air One. According to the EU treaties, the Commission plays a role in national mergers only if at least one of the companies involved receives more than a third of its turnover outside its borders, which seems at first sight unlikely in this case since both Alitalia and Air One operate primarily in Italy.

If this is the case, it would only be up to the Italian competition authority to intervene. And since the government has just approved a decree freezing national competition rules on the case, the merger will be accepted without possibile opposition.

As published by EurActiv network.

[VAFFPAX]

I wouldn't say 'without intervention'. The European Commission is still considering its options based on the legalese of the 'merger'.

Of course if you get nominated by ol' Berlusconi, you'll 'let it slide' unless you want a vote of no confidence or whatever it is these days.

S.

[pee]

Rome, 9th September - "This is the last call for Alitalia, the real catastrophe for me would be its closure".
The Secretary General of Italy's CISL union, Raffele Bonanni, speaking on news programme 'Mattino Cinque' outlined his union's position in the talks over the flag-bearing airline.
"The pilots are right to ask, alongside us, that their wages be the same as those paid by Air France or British Airways and not those paid by Ryanair. I hope that this is their objective: for my part I want to say that we are clear: no privileges, but no harassment either". For the CISL Secretary General, some issues remain open around international routes and the number of planes: "too few", in that they are being reduced from a possible load of 35 million passengers to 20 million. "This is a true error", the union man concluded.

Five of nine unions representing workers at Alitalia yesterday rejected new productivity-linked contracts offered by a consortium of Italian investors seeking to rescue the carrier. By the way, are Alitalia pilots' wages really much worse than those at Ryanair?

[Rhodes13]

Pee i think youll find that this union boss is just making excuses and stalling for time.

Whilst RYR doesn't have all the benefits of a legacy carrier it is within earshot of short haul pay deals at BA. So no RYR's pay isn't bad (well I don't think so anyway)

[Otterman]

Wages at Alitalia aren't the problem from the companies perspective. It is productivity. That is what this new entity is trying to get corrected. Way too many people for the work that is being delivered.

I did my training on the Boeing 767 in Rome at Alitalia. There were guys working there who's only job was to clean the oxygen masks in the simulator. Made my mind go wobbly just thinking about that one. Found this out after we used them one sim session, and this dude in a doctor's frock came in when the sim settled down. What this means is that you had a guy sitting in an office waiting for the oxygen masks to be used, there was a board to show when it was. You need two shifts per day, seven days a week, you have to cover for holidays, and sickness, voila you have an eight man department, where any other airline with its in house training department has zero! This is back in 2003 (so post 09/11). By the way on the day I met this gentleman there were two guys manning the office.

Maybe that excess is gone, but I am sure there are hundreds more that can be put forward by pprune readers. That outfit is sick beyond repair. And I stick to my opinion that they don't deserve to keep going. It hurts us all.

[Finn47]

Seems to me Alitalia´s administrator is playing hardball with the unions. They have been given until today, Thursday, to approve the Phoenix plan to save the company - or else, the administrator will terminate all work contracts and liquidate the old Alitalia and everybody will be out of work. Ruthless but obviously necessary from a business point of view?

Alitalia Commissioner Warns Unions Of Liquidation

[rubik101]

Alitalia self destructs.

Now we have news that the last ditch talks between Management and Unions in Alitalia have broken down.
There are currently no plans to resume talks.
The Gov't IAA have given the company until this weekend to reach a decision.
If they go down, there will be a large hole in European Aviation. More sad news for the employees on the horizon.
But in the present climate of dreadful news, most of us in the UK would say, so what? How did they survive so long?

[angels]

It's already happening.

The UGL union say they've been told that the layoff process is starting today.

CAI have suspended due diligence, but not withdrawn their offer.