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Alitalia files BK

Old 08-29-2008, 06:07 PM
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Default Alitalia files BK

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Alitalia files for bankruptcy protection
Friday August 29, 3:51 pm ET
By Ariel David, Associated Press Writer
Alitalia files for bankruptcy protection, declares insolvency

ROME (AP) -- Alitalia said Friday it has sought bankruptcy protection, taking the first step in a plan to reshape Italy's unprofitable and debt-laden national carrier.

The company said in a statement that its board had asked the government to appoint an administrator and had declared insolvency to a Rome court.


Alitalia has been losing some $3 million a day -- hurt by labor unrest, competition from budget airlines and high fuel prices. Its shares have been suspended from trading since June.

The airline said its net debt at the end of July amounted to 1.172 billion euros ($1.73 billion). The figure does not include a 300 million euro ($442 million) loan that the government granted in April to keep the cash-strapped carrier flying.

Following Alitalia's announcement, the government named Augusto Fantozzi, a tax law expert and former finance minister, as the company's administrator.

Fantozzi served as economy minister in 1995 in a government headed by Lamberto Dini and then as minister of foreign trade in Romano Prodi's Cabinet a year later.

The government and others involved have been secretive about the negotiations to save the state-run carrier, but the plan reportedly calls for the breakup of Alitalia into two parts.

The profitable assets would be taken over by a group of Italian investors ready to inject 1 billion euros ($1.5 billion) into the airline under the reported plan. The other assets will be spun off into a separate company for liquidation.

The plan is the latest attempt by the government to sell its 49.9 percent stake in the loss-making airline following a failed bid by Air France-KLM earlier this year.

On Thursday, Premier Silvio Berlusconi's government approved key changes to the country's bankruptcy-protection law, tailoring it to Alitalia's immediate needs.

The decree passed at a Cabinet meeting allows for the breakup of the company and gives the administrator the power to sell off assets through private or exclusive negotiations.

It also makes exceptions to Italy's antitrust regulations, a move that could pave the way for reported plans to combine Alitalia with Air One, Italy's second largest airline.

A group of 16 Italian businessmen has stepped up to invest in the new company, headed by Roberto Colaninno, the chairman of motorcycle maker Piaggio. He is expected to become chairman, while Rocco Sabelli, a veteran executive who has often worked with Colaninno, is the designated chief executive.

Air One's head, Carlo Toto, also figures among the group of investors.

The possibility of a combination of the two biggest Italian airlines has raised antitrust concerns, especially because the resulting company would have a virtual monopoly on the highly traveled Rome-Milan route.

The plan could also raise concerns at the European Union, which is already investigating whether the government's loan in April broke EU rules that limit public assistance for companies.

In Brussels, EU officials said Thursday they had received a draft plan and that they were examining it.

Saving Alitalia has been a priority of Berlusconi's government since he won April elections and returned to power. The conservative leader has stressed that the new Alitalia would remain in Italian hands, and that any foreign airlines would only be allowed to acquire a minority stake in it.

The government has been trying to revive talks for an international partner for the revamped Alitalia, which is expected to be a leaner company with a reduced but younger fleet, and fewer personnel that will work longer hours.

Colaninno said in an interview published Friday that Air France-KLM and Germany's Lufthansa AG are both negotiating for a possible partnership with Alitalia and are on equal footing.

"We are negotiating with both, and they're going at the same speed," he told La Repubblica daily, adding that a foreign partner is "indispensable" for the Italian carrier.

Lufthansa declined to comment on Friday, while Air France-KLM has confirmed that it wishes to "remain a strategic partner of Alitalia."

The Franco-Dutch carrier tried to take over the airline earlier this year in a bid that was opposed by unions and Berlusconi.

Corrado Passera, the CEO of the Italian bank Intesa Sanpaolo, which is acting as the government's adviser for Alitalia, said Friday it would take about a month to see if the plan could go ahead.

Passera told the ANSA news agency that Intesa Sanpaolo itself would invest 100 million to 150 million euros ($150-220 million) and take a 10 percent stake in the new company.

Passera also was quoted as saying that the deal for the creation of the new Alitalia would be conditional on approval by unions.

Reports have said the plan to save Alitalia would include between 5,000 and 7,000 layoffs, from a work force of about 20,000. The laid-off workers are expected to be enrolled on welfare programs for up to seven years.

In a statement Friday, the nine unions representing Alitalia workers said they wanted a say on the entire plan, not just on the labor aspects. A meeting between unions and the government is scheduled for Monday.
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Old 08-29-2008, 06:43 PM
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Thats just one huge mess over at that airline. Hope it all works out.
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Old 08-30-2008, 03:46 AM
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Mess? thats putting it mildly to say the least.
They schould have started fixing this problem before it got to this point.
Hope it works out for them in the long run








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Old 08-30-2008, 08:00 AM
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Originally Posted by DYNASTY HVY View Post
Mess? thats putting it mildly to say the least.
They schould have started fixing this problem before it got to this point.
Hope it works out for them in the long run
I,m too sexy for my whale!
Although I tend to agree with you guys/gals, wouldn't you say that their “mess” is no different than the “mess” at United or USAirways to name a few?
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Old 08-30-2008, 09:53 AM
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no, the mess there is far greater than it could ever -- hopefully -- be here.
The Italian gov.t has been subsidizing AZ for the last... 60 years. Alitalia has had 1 profitable qtr. in the last 29 years, employees 1.8 more employees than a comparable sized EU airline, and its employees believe they're entitled to a high paying job regardless of the company's financial performance. Just to give you an example back in 1998 (?) the pilots had Rome's Fiumicino airport (the largest in the country) closed down by sitting on taxiways and runways in protest to mngt. That's right, on the runways.
The govt. on the other hand sees an airline who has never managed to win the support of the paying public -- let alone that of the taxpayers -- as a prised crown jewel. By continuing to stifle competition on AZ's only profitable route (Milan-Rome) countless administrations have only succeded in making Italy the only European country without any real competition in the skies with all the consequences one can immagine.
The best thing Italians and their government can do is to let Alitalia go under and let the new privately held airlines develop a network of some substance.
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Old 08-30-2008, 11:09 AM
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Originally Posted by There is line View Post
... The Italian gov.t has been subsidizing AZ for the last... 60 years...
Interesting, I didn't realize how bad things were over there. However, I'm curious how they got away with subsidizing the airline for so many years? Subsidies are against EU regulations so when Sweden and Finland for example joined EU they had to stop subsidizing SAS and Finnair immediately or face very stiff fines. Those fines were so stiff they'd have put them out of business, so how exactly did Italy pull that off?
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Old 08-31-2008, 05:37 AM
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Hi guys,..I'm an Italian Pilot working on Alitalia B777 fleet.
The situation is not so easy to jugde and to speak about...
The past is past, the present is collapsing and the future is grey...I still work with my professionality and that's all I can do because It's the only thing I know and to use to protect my job, my rigths as Pilot...

Please be aware to protect your one....always!
Good luck to everybody and be proud of your job...always!

I'll be glad to aswer you any question about my Alitalia...

Ciao.
Massimo.
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Old 08-31-2008, 03:25 PM
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Originally Posted by MASSIMO View Post
Hi guys,..I'm an Italian Pilot working on Alitalia B777 fleet.
The situation is not so easy to jugde and to speak about...
The past is past, the present is collapsing and the future is grey...I still work with my professionality and that's all I can do because It's the only thing I know and to use to protect my job, my rigths as Pilot...

Please be aware to protect your one....always!
Good luck to everybody and be proud of your job...always!

I'll be glad to aswer you any question about my Alitalia...

Ciao.
Massimo.
Buono Giorno my friend - we wish you all good luck and hope that 'your' airline will survive this turmoil. As far as questions - I'm curious as to why Alitalia pilots were so strongly opposed to an Air France/KLM buyout? I thought that would've saved many jobs, wouldn't you say? I understand they wanted to keep the daily operations separate (like Air France & KLM) so seniority wouldn't be affected that much.

Also, how did the Italian government get away with subsidizing your airline (if true) for so many years when other EU countries (Sweden, Denmark, Norway [not an EU member but part owner of SAS], Finland, etc) had to stop their subsidies years and years ago?
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Old 09-01-2008, 01:48 PM
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Buon giorno wannabe...

Air France plan counted to dismiss progressively about 90 airplanes in 2 years...that would be many many pilots layed off.
almost 70 MD-80/82, 5 MD-11 cargo, 10 Embraer, 5 Atr...
The mot unfair and oppressive of the plan was about of which pilots were planned to be layed off....All the pilots flying those airplanes with no respect of any seniority.
So the Captain with 20 years of seniority flying the MD-80 would be layed off and I would be not because I fly the 777, for instance!!!
Thats would be ok for me of course but was not correct at all !

Our unions were discussing the correction to the Plan with Air France because pilots were wery interested to join a big mayor european airline but at that days we were in a very strong political interests, in a strong election polital campaign; Berlusconi declared to everybody that once elected he could do better instead to give Alitalia (part of the country) to Air France as a gift as the comunist Prodi planned to do...shame.
Air France flew back to Paris...

about your second question, it's very very difficult and complicated to set straight even though I know the answer, it's a long neverending story...next time.


Alitalia will be alive till the end of sept, after that no money to survive are assured!

Thanks for the good luck you send me I will spead it to my colleagues...we need it!

Next friday the Gov will show to our unions the plan "Fenice"...I will report it

Arrivederci amico mio.

Last edited by MASSIMO; 09-02-2008 at 08:15 AM.
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Old 09-10-2008, 06:43 PM
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I see, well hopefully things will work out. Hopefully now that the oil prices are dropping the airlines, including yours, will be able to turn things around.

Arrivederci and good luck to you all.
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