22 September, 2008

Alitalia


Incredibly, the saga of Alitalia continues. The airline loses 3m euros a day, and a month ago it had only 50m euros in cash, so it ought at least to be insolvent. There have been some cancelled flights and there are stories of credit for fuel being stopped but like some ham actor in a B-movie the corpse keeps on thrashing around.


It is a problem for Silvio Berlusconi. During the election campaign he promised that there would be an all-Italian solution for the bail out. The unions then rejected the Air France -KLM deal which was on the table. Now they have rejected the all-Italian one, which required 3,000 job losses, longer hours and some pay reductions.


On a political level Berlusconi must decide whether to ditch Alitalia and blame the unions (no one knows whether they would have rejected the previous deal but it looks, at least, as if they rejected it on the promise of something better) or whether he should press on, forcing everyone's hand.


I would counsel ditching Alitalia, for three reasons: firstly we are past the point of negotiation; forcing the issue now would require a real demonstration of harsh reality and there is neither the time nor the will for this.


Second, it does not seem likely that it can now thrive. I know of many people who stopped flying Alitalia months ago because its reliability record was so poor you couldn't be even moderately sure of catching a business meeting. I don't think they will go back to it.


Most importantly, there is the future to consider. One commentator has said that Alitalia is lost but there is still time to save Italy. The unions are so strong here that there has to come a Margaret Thatcher and the miners moment or the country will descend into chaos.


Berlusconi could send the clearest signal to other unions that he tried his best but the pilots were so intransigent that they forced the liquidation; that even Italians cannot pretend they can always avoid the nasty realities of life. It would be a good lesson for the country to learn.


But 19,000 people would lose their jobs.

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