Alitalia brushes off strikes as deal powers ahead

By Deepa Babington

November 18 2008

ROME

Labour strife has repeatedly scuppered Alitalia’s efforts to restructure but, for once, wildcat strikes aimed at thwarting the Italian airline’s takeover seem unable to put the brakes on a deal.

While hundreds of flight cancellations dominate headlines as protests enter their second week, the CAI consortium of Italian businessmen is quietly but swiftly nearing the finish line in its bid to buy and relaunch the bankrupt flag carrier.

The group overcame the key hurdle of regulatory approval by winning European Commission backing for the 375 million euro ($474.2 million) takeover last week. The green light from the airline’s bankruptcy commissioner is expected this week.

The commissioner must ensure CAI’s offer is not below market value. But with no other bidders in the fray and the airline’s cash reserves expected to dry up by the end of the month, he has already hinted the offer will be accepted.

“We’ll wrap up the deal this week,” Augusto Fantozzi told Italian television, adding that CAI’s offer was not far off the value of Alitalia assets as estimated by independent advisers. “I hope only pleasant surprises remain. By the middle of the week, there will be serenity.”

CAI is offering 275 million euros for Alitalia’s flight operations and 100 million euros in a mix of cash and debt for other units, and will take on further debt of 625 million euros.

Indeed, the group this week began sending out letters to hire selected Alitalia staff for the relaunched airline, even if only four out of nine airline unions back the deal.

Pilot and cabin crew unions reject new labour contracts under the takeover, and a small group of renegade workers triggered airport chaos and delayed or cancelled hundreds of flights last week with impromptu work-to-rule protests.

Alitalia is expected to cancel a further third of all flights this week. It plans to seek legal redress while the government has vowed to prosecute the offenders.

But two sources close to CAI, who requested anonymity because of the confidential nature of talks related to the rescue, said the strikes posed little threat to the takeover, even if they exposed the airline’s Achilles heel once again.

The Italian government that backs CAI is confident.

“CAI’s project is going ahead inexorably and irreversibly,” said Labour Minister Maurizio Sacconi. “A small minority can’t stop what’s in the general interest.”

The commissioner Fantozzi appeared equally unfazed, even if labour opposition nearly forced CAI to pull its offer in October and scuppered a previous Air France-KLM takeover of Alitalia.

“The protests are, as is reasonable, flaming out because in my opinion, this is a backward-looking battle,” he said.

AIR FRANCE-KLM RETURNS?

Barring further surprises, CAI should wrap up the deal — including a purchase of smaller rival Air One’s assets — by the end of the month so Alitalia can reinvent itself under private ownership early next month.

Talks to line up a foreign partner to give Alitalia backing on an international level continue, the sources close to CAI said. Italian media say Air France-KLM

is almost certain to edge out Lufthansa in that race and enter with a 20 percent stake in the relaunched carrier, but the sources cautioned that no decision had been made.

Another source close to the talks said Mediobanca had been chosen as the adviser for Air France-KLM and a decision on a partner could come as early as this week.

The French airline’s Chairman Jean-Cyril Spinetta last week also played down reports and said a partner had yet to be chosen.

Air France-KLM has long been considered Alitalia’s logical foreign partner, and the two have commercial ties under the Skyteam alliance. Choosing a partner from another alliance might force Alitalia to exit Skyteam and pay a penalty.

But Lufthansa’s strategy of relying on several hubs is favoured by Italian politicians and unions, who believe it will allow Alitalia to maintain operations at its Milan hub and save more jobs in the city.

“The competition is still alive, and it could go either way,” one of the sources said. (Editing by David Cowell)

Source

Ailing Alitalia grounds flights, says more misery next week

November 15 2008

ROME

Strike-hit Italian flag-carrier Alitalia cancelled about 40 flights from and to Rome and Milan on Saturday and told travellers to expect further delays next week.

“Alitalia is developing a reduction plan for its flights for all of next week due to the continuation of the strike,” said a company statement on the sixth day of the industrial action by air crew opposed to a takeover deal.

The ailing airline plans to post a list of next week’s affected flights on its website from Sunday.

Seven departure flights and 21 arrivals were cancelled on Saturday at Rome’s Fiumicino airport, the Telenews agency reported. The Italian news channel Sky Tg24 said 16 flights in and out of Milan Linate would be grounded.

The airline grounded 60 flights in or out of Rome on Friday.

The pilots are striking in protest at a takeover deal by investor group Italian Air Company (CAI). The group made a binding offer last month for the air passenger transport activities of Alitalia, which was put in special administration in August.

Under the terms of its offer, CAI would take on 12,500 Alitalia workers while cutting some 3,250 jobs.

The airline, which is 49.9 percent state-owned, is losing about three million euros (3.8 million dollars) a day.

Antonio Martone, the head of the Italian watchdog for labour action affecting public services, said Thursday the strike was a “flagrant violation of the rules (and) a serious infringement of citizens’ rights.”

He issued a “final warning” to the representatives of the five unions to come to an agreement on the takeover deal.

The new Alitalia is set for take-off on December 1.

Source

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Published in: on November 18, 2008 at 9:05 pm  Comments Off on Alitalia brushes off strikes as deal powers ahead  
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