Alitalia brushes off strikes as deal powers ahead

By Deepa Babington

November 18 2008


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.


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)


Ailing Alitalia grounds flights, says more misery next week

November 15 2008


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.


Italian Prime Minister meets with German Chancellor

Ryanair to appeal EU’s ‘corrupt’ support of Alitalia takeover

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Italian Prime Minister meets with German Chancellor

November 18 2008

By Mathis Winkler

Merkel and Berlusconi Back Alitalia-Lufthansa Deal
Berlusconi and Merkel
Großansicht des Bildes mit der Bildunterschrift: Despite serious problems, Merkel and Berlusconi still had some fun

Meeting in the northern Italian port of Trieste on Tuesday, Germany’s chancellor and her Italian counterpart focused on global economic problems — but also had time for a quick game of hide and seek.

Italian Prime Minister Silvio Berlusconi said Tuesday he and German Chancellor Angela Merkel favor a possible partnership between German airline Lufthansa and ailing Italian carrier Alitalia.

“We both view a collaboration between Alitalia and Lufthansa very favorably. In fact we hope it will occur,” Berlusconi said during a joint news conference with Merkel in Trieste after surprising his German guest with a game of hide and seek at the beginning of their meeting.

As Merkel approached to greet Berlusconi, he hid behind a column and called out “coo-coo!”. Merkel then turned to him, laughed and said “Silvio!” before embracing him, according to reports.

Earlier Tuesday Italy’s top financial newspaper, Il Sole 24 Ore, reported that a private Italian consortium, CAI, which is in the process of purchasing the state’s controlling stake in Alitalia, was on the verge of clinching a deal with French-Dutch airline Air France-KLM.

The “imminent” deal would involve Air France-KLM buying a 20 percent stake of Alitalia for some 200 million euros ($252 million), the newspaper said without citing sources.

But Tuesday’s remarks by Berlusconi suggest the matter has still to be decided. Earlier this year the Italian premier, who was then head of Italy’s opposition, torpedoed a bid by Air France-KLM to buy Alitalia when he campaigned to keep the troubled flagship airline “in Italian hands.”

Focus on economy

Just three days after they both attended the Group of 20 (G20) summit in Washington on the global financial crisis, Berlusconi and Merkel largely focused on economic issues during their talks.

With both Italy and Germany sliding into recession the time has come to “face the economic crisis, but we must not forget environmental themes,” Merkel said.

“We must not choose the wrong measures,” the German chancellor said, adding that “European (Union) but also national assistance packages must be aimed at sectors that have a future,” she added.

Germany was insisting on more flexibility in making EU structural funds available “so that the money can be spent without too much bureaucracy,” Merkel said.

No interventions

As “Europe’s two main manufacturing nations,” Berlusconi said, Italy and Germany opposed any measures contained in a EU climate and energy packet that would negatively impact on their countries’ industries.

Asked whether Italy intended to follow the example of the US, where moves are afoot to bolster that country’s automobile industry, Berlusconi replied: “We don’t believe such measures should be taken.”

“We don’t exclude them, because we first want to see how the market behaves, but at the moment no interventions are planned,” Berlusconi said.

Referring to the importance of the G20, which brought together developed and emerging economies, Berlusconi said he and Merkel still believed the Group of Eight (G8) of the world’s most developed nations should “continue existing.”

The G8, of which Italy next year takes over the presidency and hosts its summit, should however “be enlarged to a G14 or G20 depending on the problems brought to the table,” said Berlusconi,

FMs commemorate Nazi victims

Steinmeier and Frattini at La Risiera di San Sabba memorial

Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift: Steinmeier and Frattini at La Risiera di San Sabba memorial

Germany’s Foreign Minister Frank-Walter Steinmeier on Tuesday meanwhile joined his Italian counterpart Franco Frattini in laying a commemorative wreath for the victims of a former World War II Nazi death camp near Trieste.

The German foreign minister’s morning visit to the Risiera di San Sabba was seen as an attempt to mend fences with Italy. Acrimony exists between the two countries 60 years after the end of the war over demands for retribution for Nazi-era atrocities.

According to estimates, between 3,000 and 5,000 people — mostly political prisoners — were murdered at the camp.

“The atrocities perpetrated at Risiera di San Sabba in the name of Germany are part of our common history,” Steinmeier said during the memorial ceremony. “Many are the events and the places of memory which represent the betrayal of civilization by Germany.”

Steinmeier also recalled the “suffering of around 600,000 Italian soldiers” interned in German prison camps. He was referring to those imprisoned following Italy’s decision in September 1943, after toppling fascist dictator Benito Mussolini’s, to abandon its Axis alliance with Germany.

Joint historic commission

Frattini and Steinmeier also announced the creation of a joint Italian-German commission of historians which would research the treatment of Italian World War II prisoners in German hands.

Last month the German government rejected a verdict from a Rome court ordering Germany to pay personal damages for Nazi atrocities to match reparations already paid to Italy as a nation.

The case was filed by nine families on behalf of relatives killed when Nazi soldiers massacred 203 people at Civitella in northern Italy in June 1944. The Italian court awarded them 1 million euros ($1.3 million).

Germany is currently preparing a complaint to the International Court of Justice in the Hague to fend off further reparation claims.


Ryanair to appeal EU’s ‘corrupt’ support of Alitalia takeover