Trade unions push Alitalia closer to bankruptcy

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Trade unions push Alitalia closer to bankruptcy

09 Aprile 2008

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.