Alitalia (or Linee Aeree Italiane S.p.A), the flag carrier airline of Italy is going thorugh difficult times but this is not new for the airline with the exception that under the EU rules, the government cannot inject cash into the failing airline like they had been doing before.
Disclaimer: A lot of the facts are from wikipedia article.
Financial Situation in the Past -
- Since 1946 (established on September 16th 1946) only one year of profit in 1998.
- Between 1999-2008 – A total loss of 3.7 billion Euros
- Go
vernment help/loan – 1.5 billion euros in 1998, 1.432 billion euros in 2002, 400 million euros loan in 2004 and more in 2005 (4.9 billion investment since 1998) - Current Government help/loan – 300 million euros emergency loan to stave the airline’s collapse
- 2006 onwards – “The government could in 2006 no longer offer support to the failing
airline since it has been forbidden by the European Union to inject new
capital“. Hence lookout for a private entity to take over the airline. - Expectations in 2008 – 600 million euro loss (including 400 million euros on increased fuel cost)
Key Recent Events -
- March 17th 2008 – Italian government approved takeover bid from Air France-KLM
- April 2nd 2008 – Air France – KLM withdrew the bid after failure of negotiations with the union.
- August 29th 2008 – The airline filed for bankruptcy protection with restructuring the airline (like Chapter 11)
- Current fuel situation – The airline recently announced that their fuel stock will run out on September 14th 2008, since due to the current financial situtations no-one seems to be selling them any fuel.
- Current - CAI (Compagnia Aerea Italiana), the Italian investment group is willing to spend 1 billion euros to “rescue and relaunch the airlines”
Current Scenario (with CAI, Compagnia Aerea Italiana) (from here and here)-
More than half of the workers unions at Alitalia rejected at Monday 8th
of September 2008 the new productivity-linked contracts offered by CAI.
These new contracts are a condition for the takeover to go ahead. The
decrease of wages of at least 25% was also not acceptable to the
unions. The unions rejected the proposals after a meeting with Rocco
Sabelli, the designated managing director, and labour ministry
officials. The government has set the deadline for acceptance by the
unions at Thursday the 11th of September 2008. On Friday September 12
2008 CAI broke off negotiations with the unions. CAI stated “that after
seven days of meetings, there aren’t the conditions to continue
negotiations.”Italian Prime Minister Silvio Berlusconi yesterday (Sepetember 16th 2008) pushed Alitalia’s
labor unions to accept concessions proposed by Italian investment group
CAI, which is willing to spend €1 billion ($1.4 billion) to rescue and
re-launch the troubled airlineSpeaking in Paris following a meeting with French President Nicolas
Sarkozy, Berlusconi said the Italian government is willing to extend
“robust compensation” to 3,250 AZ employees who would be laid off under
the CAI rescue proposal, including 80% of the workers’ base pay for
eight years.But he warned that if labor groups and CAI cannot
reach agreement, 20,000 AZ workers will be out of jobs. “The government
would not be able to guarantee [compensation] for 20,000 people,” he
said, adding that labor groups would be making a mistake to think the
government’s offer of compensation would apply if the carrier
collapses. “There truly is no alternative” to the CAI plan, he said.
“The alternative is [AZ's] failure.”
