By Guy Dinmore - The Financial Times - July 15 2008
A rescue for near-bankrupt Alitalia is being drawn up that envisages at least 5,000 job losses at the Italian flag carrier and a merger, backed by Italian investors, withAir One, its smaller independent rival.
Continued Italian ownership of the airline and the sale of the state's 49.9 per cent stake would signify a major political victory for Silvio Berlusconi, prime minister.
However, the main hurdle remains acceptance by the trade unions, though the centre-right government appears ready to run the risk of industrial action should maintaining the airline's future turn into a test of the unions' already diminishing powers.
Intesa SanPaolo, an Italian bank appointed as adviser to Alitalia, is expected to finalise its plan next month. Time is not on their side as the airline, according to some estimates, is losing more than €2m ($3.2m) a day.
According to industry sources, Intesa is working on an "all-in model", where as much as possible of Alitalia and its 11,000 workers will be preserved for a merger with Air One, owned by Carlo Toto, a construction magnate.
The new airline would have a combined domestic market share of at least 70 per cent, envisaging revenues of some €4.3bn. A partnership on routes with one of the big three European airlines would follow soon afterwards.
AZ Servizi, in which Alitalia holds 49 per cent, may be broken up. Parts may be merged into the new airline and the rest liquidated. AZ Servizi, with some 8,000 workers, includes maintenance, ground services, airport management and ticketing units.
In total, more than 5,000 jobs could be lost from Alitalia and AZ Servizi. Air One might also suffer some redundancies.
This compares favourably with the offer by Air France-KLM which was accepted by the previous centre-left government but rejected by Mr Berlusconi and the unions in April in the middle of an election campaign. That proposal set out 2,100 cuts at Alitalia but probably a total of 6,500 to 7,000 when AZ Servizi was included.
Government officials say the unions realise this is their last chance and there is a fair chance they can be persuaded to accept. If not, Mr Berlusconi, who was elected with a large majority, appears ready to tough it out.
The risk remains that the fate of Alitalia will become entangled in wider labour grievances over budget cuts and salaries that may snowball into an outright confrontation between unions and government. Some union leaders are already speaking of a general strike after the summer.
Nine unions negotiated with Air France-KLM over Alitalia and in the end all rejected its takeover bid. It remains to be seen if the unions will preserve their unity this time. For the moment they are holding fire and waiting to see what Intesa proposes.
Marco Veneziani, spokesman of the Uil Union, says he has little trust in Mr Berlusconi's powers to save the airline.
"If Intesa's plans solely envisage cuts, then it has no future and Uil is ready to organise strikes and protests. Workers are not to pay for Alitalia's relaunch."
Claudio Claudianni, secretary general of the Cisl transport workers union, says Alitalia must be preserved as a whole, but he is ready for some cuts. "The deal is sacrifice today and a future tomorrow," he says.
Defending the unions, he says there has been no strike at Alitalia for two years and wages have been blocked for four. He says even Air France-KLM admitted in negotiations that Alitalia's labour costs were cheaper. He urges a quick resolution.
"Intesa must act soon and not prolong Alitalia's agony. We are already off the precipice," he told the Financial Times.
Union leaders point out that they can also mobilise their members at Air One if necessary.
Benedetto Della Vedova, a member of parliament for the ruling centre-right Forza Italia party who has long followed events, says the airline failed because it was never run as a business venture but more as a dispenser of salaries according to the unions' political agenda.
"If you want to rescue the company you have to go in with a machete," he says. Mr Della Vedova, who has not opposed the airline's bankruptcy, believes a 40 per cent cut in jobs is needed. Even though the unions see the "guillotine" coming down in the shape of bankruptcy, he fears a confrontation.
Intesa was part of a failed takeover bid together with Air One last December. For that reason Mr Toto's acceptance of the plan, as owner of Air One, is widely taken for granted.
Industrial sources note that conditions have deteriorated so much in the past seven months that nothing can taken for granted, not even Mr Berlusconi's go-ahead. Asked if he thinks that more than 4,000 job losses would be politically acceptable, Mr Della Vedova says he is not sure.
Posted by Benedetto Della Vedova at 19.07.08 11:12