Thursday, 3 April 2008

Alitalia and the Bum Deal

Air Italy....Alitalia.....has been in talks with Air France for several weeks now....hoping to settle a mess. Alitalia is basically bankrupt....and has been for several years. The country tosses in millions per quarter...to keep them going. The only real deal in three years....was Air France.

The deal was simple....Air France agreed to buy shares at 20 cents a share....which is awful pitiful but then the rest of deal had to work. The bid called for 2,100 jobs cuts, eliminating Alitalia's cargo business, scaling back its maintenance unit and eliminating some medium-range jets before adding long-range planes. Things kinda got out of control after this "offer", when the unions stepped in from Italy.

The Unions said that they wanted to work hard on this.....to make this work....so they insisted on a counter-offer....which is kinda amusing...in that the union owns nothing. They were absolutely happy with the job cuts if Air France agreed to keep Alitalia's entire ground service and maintenance business, AZ Servizi, alive and going....at full power....full strength....which means the personnel cuts were virtually eliminated. Then the union said that Air France could limit the reduction in medium-range jets and speed the addition of long-range aircraft included in Air France's takeover offer. The limit on reduction of the medium-range jets.....pretty read to say.....a few here and there....but otherwise....we keep the same flights and personnel working.

So last night, the Alitalia folks and the Air France folks parted for the evening and it appears the deal is dead. The government of Italy is now strongly talking about bankruptcy....but this is Italian bankruptcy....which means a government appointed guy....like the last dozen....would run the company....until a capable buyer could step in and buy the company....and millions more will be tossed into the high-loss airline.

Lufthansa and Aeroflot (the Russians)...were into the talks back five months ago but then chilled. Some folks are thinking both are willing to come back and talk more now...especially since the share price is potentially down to 20 cents a share.

Whichever idiot gets the next nod....has the same problems....the unions. Its fascinating how thing work in Italy....everyone is guaranteed a job....for life.