Alitalia is within hours of flying into history

by Christopher Elliott on September 18, 2008

By the time you read this, Alitalia may be gone.

Italy’s deeply troubled airline was on the verge of liquidation this morning, according to reports.

“I really think the future of Alitalia is hanging by a thread,” Minister Maurizio Sacconi said on a morning talk show, adding that liquidation of the bankrupt air carrier was a “very real risk” later today, when an investor group offering to rescue the state-controlled airline meets.

Alitalia is running out of cash to buy fuel and investors can’t come to terms with unions on a bailout. Unions have been told they have until 3:50 p.m. (9:50 a.m. EDT) today to give their final position, according to reports.

Yesterday, the airline canceled 40 flights after a small union called a four-hour strike against the rescue plan. Hundreds of workers protested at Rome’s main airport.

Alitalia isn’t without potential suitors. Air France-KLM has expressed interest, as has Lufthansa. Air France walked away from a deal last spring to buy the government’s controlling stake after union objections.

It’s a good time to liquidate. The summer tourist season is over, so relatively few vacations will be affected by Alitalia’s demise.

I won’t be too broken up to see it pass away, nor will some of my blogging colleagues. The airline offered perhaps the worst customer service in the civilized world.

Rest in peace, Alitalia.

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Tagged as: airline, alitalia, bankrupt

  • Robert Smith

    I don’t like to see businesses go out of business. But one thing that is a mystery to me is the attitude of union workers. They would rather stand on some perceived “job and income for life principle” and ultimately have their employer go under rather than compromise. I know that a lot of airline employees have compromised to keep carriers going and now they feel bitter about not been treated appropriately when things get a bit better. But it still seems like cutting off one’s own nose to spite one’s face.

    Does anyone have any insight into this phenomenon?

  • Matthew B

    The union leaders do have a job for life – as union executives. They would prefer members in one company be on the unemployment line than compromise in an industry. This is a world wide phenomenon. It might seem odd, but there are other Italian airlines (whether they’re unionized I couldn’t say). I also think the union expect that the government will come up with more money rather than have 40 – 50,000 people on unemployment. Personally, I think that the Italian government should walk away from this toxic company. I would also make the point that even in a private company, the directors have a duty to the shareholders to preserve value. Sometimes the company’s assets will be worth more in liquidation than as a going concern, in which case it is incumbent upon the directors to call a general meeting to propose the liquidation of the company. If a company is insolvent, in most countries the directors are prohibited from allowing the company to continue to trade, they either call in official administrators, or put the company into liquidation immediately.

  • Frank

    by Christopher Elliott
    I won’t be too broken up to see it pass away, nor will some of my blogging colleagues.
    ====================================================

    I’ve been through a bankruptcy and liquidation. I NOT only find your comment to be insenitive, but ignorant. What you’re saying is……..WHO CARES….EVERY “EMPLOYEE” IN THAT COMPANY LOSES THEIR JOB! And, it’s devastating to wonder where your next paycheck will be coming from. My airline went under DESPITE that fact that I had an IMPECCABLE record. Helped out on my days off, stayed when weather went bad late into the night, did several 24 hour shifts and always worked hard. Heck, one of my coworkers would take passengers home with him and let them camp out of his couch after cancellations with the (COMPANY) no hotel policy.
    Losing a job is devastating to EVERYONE involved. I sadly remember when the TWA furloughs took affect:

    Hole was too deep

    For Ms. Lohrman, who had two grown children, the hole was too deep. The 17-year flight attendant flew most of her career with Trans World Airlines, which was purchased by American in 2001. She was furloughed on her 40th birthday in January.
    Five months later, she committed suicide.
    Ms. Lohrman”s mother, Jackie Mayhew, said that her daughter was devastated because of the layoff and that her life had spiraled out of control.
    It just wasn”t a job – it was an identity. She had no other education, and she could only find minimum-wage jobs, Ms. Mayhew said. She just got to the point where she didn”t see any way out.
    Ms. Lohrman”s death shocked the close-knit airline community.
    Hundreds of co-workers – some estimated as many as a thousand – flew to St. Louis for Ms. Lohrman”s funeral.

    Next time you fly, Mr Elliot, ask that AIRLINE EMPLOYEE when was the last time they got a raise? How much they GAVE UP to keep their jobs? If anyone had to sell their homes? Hear of any Pilots who just finally retired in disgust? Yet, DESPITE ALL OF THIS, I bet you will find many EMPLOYEES ON THE LINE, with a smile, willing to go above and beyond for you…………….even though, YOU, conceived this idea that, after a bad experience, YOU HOPE A COMPANY FAILS.

  • http://www.tripso.com/author/elliott Christopher Elliott

    Somebody feeling a little grumpy today?

  • Frank

    You travel bloggers need to VIEW THE INDUSTRY from both sides. Mine was conveyed to you, accurately. You’re response was less then professional.

  • Frank

    AND, YOU ALL WONDER WHY THERE IS UNION ISSUES? READ ON:

    American Airlines, flight attendants open contract negotiations
    Contract negotiations are underway between American Airlines and the Association of Professional Flight Attendants (APFA), the union representing the airline’s flight attendants. The union is calling for improved working conditions, the restoration of lost wages and benefits, and an end to CEO bonuses. An APFA press release about the commencement of contract negotiations explains:

    “Flight Attendants have seen the value of their real wages shrink by 25 percent and many are struggling,” said Laura Glading, president of APFA, representing nearly 19,000 flight attendants. “At the same time, senior executives of this airline repeatedly and brazenly reneged on their promise to share the pain,” awarding themselves big bonuses this year, essentially “claiming credit for accomplishment that are entirely attributable to the contribution of American’s rank and file employees,” she said.

    APFA opened Immediate Relief Negotiations with the carrier this summer to seek a temporary fix for the most pressing issues confronting Flight Attendants, including overhauling the Flight Attendants scheduling system, but those talks failed. The Union believes an agreement is in the best interest of both APFA and the company, particularly with the recent fall in the price of oil.

    “With oil falling by more than $35 per barrel, American is paying approximately $2.5 billion less for fuel. A single dollar reduction in the cost of a barrel of oil could fund a 10 percent increase in Flight Attendant’s wages,” said Glading. “These will not be easy negotiations, but we must work together to fix the many problems that exist and make our airline the best it can be,” Glading continued.
    APFA, the nation’s largest independent flight attendant union, represents only American Airlines flight attendants.

  • http://www.tripso.com/author/elliott Christopher Elliott

    No, your response was less than professional.

    You YELLED. Where are your manners?

    You made a preposterous counter-argument. What do TWA, an airline that was acquired by American Airlines, have in common with Alitalia, a failed European carrier on the verge of liquidation? If you said “almost nothing” — you’re right.

    When logic failed you, you went for shock value. How does your disturbing anecdote persuade anyone that we’re better off without Alitalia? It does not.

    Who’s to say the folks who lose their jobs won’t get another one working for a more competent airline?

    And then you put words in my mouth — another rhetorical shortcut. I didn’t say I hope the company fails. I said I won’t be broken up. There’s a difference.

    If you think my comments are ignorant and insensitive, I’m fine with that. Let me invite you to start your own blog, where you can make your own ignorant and insensitive remarks.

  • Elisa

    I have to agree with Christopher here – and very few people in Italy are sad to see Alitalia go, as well. Appaling service was also for Italian customers, which actually abandoned the airline as soon as other carriers were available: AirOne, the company which was in the group of those who wanted to take up the good part of the airline, has in a few years, reached almost the same market share of national flight of Alitalia (26% against 28%).
    Problem here is that lots of unions – there were over 9 unions sitting at meetings – wanted not to keep working, but to keep things as they were, and that’s because it’s a proven fact that it was actually the unions that ran the company and not the management. For example, it was the pilots’main union to decide who was going to be promoted, to become a trainer, or where to turn for upgrading of travel strategies (btw, the union itself had a consultancy company, including many of the same Alitalia’s pilots doing the consulting for the strategy, so you see………..).
    Alitalia’s crews do not go to their leaving airports on their own: they have hired vans or cars taking them there, from home or from the connecting hotel, and the same for going home. Paid by the company, of course. They had 502 rooms in connecting hotels booked all year long, no matter who was staying there, and the latest strike, last July, by flight attendants, was called for not having the same hotel rooms square footage as the ones the pilots have.
    Do you really believe this are serious unions? Or aren’t they just power centers, fighting to keep that power?

  • Frank

    On September 18th, 2008 at 5:53 pm Christopher Elliott said No, your response was less than professional.
    You YELLED. Where are your manners?
    ===================================================

    and where is your internet etiquette?……Remember, attack the post, NOT THE POSTER. (grumpy)
    MY POINT was liquidations are tough on the EMPLOYEES. Hence, my remark about people losing their jobs and in some cases, taking their lifes. If that’s shock value, then, yes it is. It’s NOT ONLY a company going under, its EMPLOYEES losing their jobs.
    I dont care to start a blog, but its VERY EASY to show THIS ONE’S shortcomings!
    Imagine that, another whine about the airline industry site.

  • Frank

    On September 18th, 2008 at 5:53 pm Christopher Elliott said
    You made a preposterous counter-argument. What do TWA, an airline that was acquired by American Airlines, have in common with Alitalia, a failed European carrier on the verge of liquidation? If you said “almost nothing” — you’re right.
    ==========================================================

    I would expect that reply from you.
    ANSWER: Thousands, and I mean thousands of jobs lost at both carriers!!

    I know, you’re interested in the MORE “important” issues. Food service, FF miles, legroom, leather seats.

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