Alitalia's crazy woes are a metaphor for modern Italy

Ryanair has fewer employees than Alitalia but twice as many pilots, flying three times as many planes, carrying five times as many passengers. Chaotic Alitalia is a metaphor for modern Italy

Alitalia on a journey to nowhere
Tim Hedges
On 2 May 2017 10:53

A friend, an experienced traveller, took a long haul Alitalia flight recently and said it was really good. It is worth saying because many people have had the opposite experience.

And, of course, Alitalia wasn’t her first choice. You take Alitalia because it is the only way of getting home.

The reason is no longer Alitalia’s traditionally loose attachment to its schedule -- Always Late In Take-off, Always Late In Arrival. It is that these days you don’t know whether they are going to take off at all.

Either they are having a restructuring, or they have run out of money or they are on strike. The pilots, cabin crew, ground staff and baggage handlers all go on strike independently, so this is a high probability.

But now it seems to be breathing its last. Let me say, Alitalia is not the worst airline in the world. The problem is that it is overstaffed, its staff, by and large, are overpaid, and it is by some margin the worst managed airline in the world.

Alitalia has had nearly as many relaunches as Italy has had governments. Until fairly recently it was supposed to be a Roman thing. Despite the growing market for business flights, the business centre being Milan, all its employees had to live in Rome. They were flown up to Milan at the start of their day and flown home at the end.

Alitalia has a history of absorbing huge amounts of cash (often euphemistically known as ‘investment’) and handing it to its employees. It is calculated to have hoovered up €7 billion in total, although that does not include the hidden subsidies by dint of being the national flag carrier.

By 2008, the company was demanding another dollop of cash, but the European competition authority would not permit any more subsidy. Prime Minister Berlusconi said not to worry, he would sort it. And he did. For a while.

A group of his mates got together to buy the company, leaving most of the debt to the Italian taxpayer. It would be merged with low cost carrier Air One (airone means heron in Italian and that was their logo) run by Carlo Toto. Air One was also bust.

Toto now has an Ireland based business leasing aircraft to, yes you guess it, Alitalia.

The new company launched in January 2009 with Air France KLM taking a 25 percent stake. Within a year the staff, who had vociferously demanded to be rescued, were out on strike.

Air France KLM were not happy with their investment and refused to take up options for further shares. The company ran out of money and the government organised another rescue, in part, from the Italian Post Office.

That money went the way of all the rest so Etihad Air was wheeled up to the plate, taking a 49 percent stake. Now that money has gone. A new €2 billion rescue was organised contingent on pay and job cuts, but the unions turned it down, demanding to be rescued unconditionally.

But now there is no one left to rescue them. Etihad are fed up, Air France has lost money, even the Post Office has lost money. Lufthansa was asked if it fancied a punt: first reports were that it might, with 9,000 job losses, then no, they really didn’t want it anyway.

Alitalia staff are paid nearly double what Ryanair pay. The airline is too small and has lost routes not just to the low cost flyers but also to high speed trains.

On average in major European countries, budget airlines account for around a quarter of seats sold. In Italy it is 49 percent, greater even than Ireland, where the most popular one is based. Ryanair is Italy’s favourite airline, Easyjet is second, Alitalia third.

Ryanair has fewer employees than Alitalia but twice as many pilots, flying three times as many planes, carrying five times as many passengers. Ryanair makes a profit of €1.2 billion whereas Alitalia is a bottomless pit.

The government will tide it over until it can be sold, but I fear there will be few jobs remaining. This has been an unhappy tale

Tim Hedges, The Commentator's Italy Correspondent, had a career in corporate finance before moving to Rome where he works as a freelancewriter, novelist, and farmer. You can read more of his articles about Italy here

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