Trade unions push Alitalia closer to bankruptcy

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Alitalia, Italy’s flagship airline, received another blow in its battle for survival after Air France-KLM walked out of negotiations with the trade unions. Since the Franco-Dutch carrier had been the only bidder left, the company now faces bankruptcy unless the unions are willing to accept Air France-KLM’s conditions for the takeover or another bid is organized soon.

The unions had been hostile to the Franco-Dutch offer from the start. Even after Air France-KLM somewhat modified its initial restructuring plan in late March all nine unions involved in the negotiations opposed the offer because of the Franco-Dutch firm's intention to cut 2,100 jobs (out of Alitalia’s 11,000 workforce) and close the cargo unit by 2010. Air France-KLM had secured the support of Alitalia’s board in March and made the takeover dependent on the assent of the next government and the unions . Many expected that the final decision would not be taken until after the April 13/14 elections but trade union inflexibility exhausted the patience of the company led by Jean-Cyril Spinetta and he decided to withdraw from the talks on April 2.

In the days following the collapse of the deal, public opinion turned against the unions as they had blown what looks like the last chance to save Alitalia from going out of business. Hundreds of employees; pilots, stewardesses, administrators, turned their anger into open protests against the unions, who, in theory, are supposed to represent their interests. Maurizio Prato, the CEO of Alitalia, had strongly backed the deal with Air France-KLM. After the breakdown of the talks he resigned.

Further attacks came from the press and politicians. Interestingly, harsh criticisms also came from the outgoing centre-left government and the recently founded Democratic Party (PD) whose senior members had traditionally been close to the unions. The episode may therefore have political repercussions as the PD has not yet found its place in the political spectrum oscillating between centrist and leftwing positions. Its alienation from the unions over the Alitalia takeover could signal a rupture with its traditional trade union bias.

It may be difficult to understand the motivation behind the union’s position since bankruptcy  - even if followed by a successful restructuring of the company’s assets - will involve more job losses than Air France-KLM’s plans. The answer might be found in a statement made by Luigi Angeletti, the secretary general of UIL, one of the unions opposed to the takeover bid. Angeletti told the Corriere della Sera newspaper that “our profession is to negotiate”. This sums up the way the unions have behaved towards Alitalia over a number of years. While it has been obvious that a major shake-up of Alitalia’s structure was needed to make the company competitive and profitable, negotiations with the unions over necessary reforms including job cuts went nowhere. The impression which emerged and which has now provoked considerable resentment against the unions is that they are negotiating for the sake of negotiating without keeping the wider public interest in mind.

There is still a slim possibility that another proposal will be put forward by some company or consortium. This could involve a bid from an alliance of Italian businesses or by the German airline Lufthansa. However, an all Italian bid would need to have the support of some major bank and this is not foreseeable at the moment. At the same time, Lufthansa has not been willing to comment on Alitalia. While it regards the Italian market as attractive, it is unlikely to make a bid on its own.

Air France-KLM has made it clear that it is prepared to return to the negotiating table under the conditions it set in March. If the unions realize the responsibility they bear for the future of Alitalia, they can still do their share to prevent the collapse of the company. But they have to come to their senses soon.

 


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