Yet another Alitalia rescue plan...
JF Mezei
and the other half with debts and old planes. The second half would be
put into administration/liquidated.
The viable half would be merged with Italian held Air One.
About 7000 redundancies. The government would offer them jobs in the
postal service or as tax collectors. (this is almost funny).
The combined entity would have 60% of the market in Italy, and generate
EU antitrust concerns, but Italy itself is ready to give it antitrust
immunity.
I think shareholders have known for some time that they would end up
losing the value of their shares, either through recapitalisation or
liquidation. Their only chance would have been the AF/KLM buyout.
Creditors will not be happy. There are some hints that the Italian
government may pay back some of the debt, probably to make those accept
the deal since creditors will have to write off those debts when the
"bad" company is liquidated without any assets.
.
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JF Mezei
-Alitalia is now under bankrupcy protection. On August 29, it was
declared insolvent. It will sell off assets and then be liquidated.
Stuff that stays with Alitalia is to be liquidated. It now appears to be
beyond the point of no return.
-CAI - Compagnia Aerea Italiana s.r.l. has now made a formal bid to
purchase some assets from Alitalia. This company will then merge with
Air One. The bid expires on Sept 30th.
-The comissioner overseeing the bankrucpy protection has given unions
one week to get on board with the plan. Supposedly, Alitalia has really
runned out of cash this time.
-Cargo operations and Heavy maintenance units stay with Alitalia.
-Call centre and IT are to be outsourced.
-Fleet to be reduced to 140 aircraft (from 173 now). But plans to boost
it back up to 158 by 2013. (supposedly details are available, but I have
not found them).
-The labour minister said that there would be 3250 job cuts, and 2750
workers that would be outsourced. (this from a combined Alitalia-AirOne
workforce and covers only permanent employees, not employees on contract
or temps.)
-Speculation about AirFrance-KLM and/or Lufthansa taking a stake in the
new company. Italian governmmet has confirmed they may be interested but
no more than a minority stake will be allowed.
-Milan-Linate will focus solely on Milan-Rome route.
-CAI will buy/merge wit Air One, giving it 55% of the domestic market.
Alitalia currently has 30%.
The issue of foreign airline investment will be interesting. If AF-KLM
gets a minority stake, it is less likely that it will start services
from Italy to the USA (as per the new open skies deal). But if AF-KLM
and/or LH are shut out, I would see then start to run trans-atlantic
services that will compete against the new Alitalia.
JF Mezei
Some unions agreed, but some major ones, including pilots and FAs
refused to agree. The deadline has been extended to Friday. But the
person overseeing the bankrupcy must act now: either proceed with the
deal, or liquidate. Alitalia is down to less than 70 million in cash now.
To compound matters, about 50 flights had to be cancelled at Rome
because of employee meetings and protests.
My bet is that the unions won't accept, and the administrator will
shutdown Alitalia and proceed with stuff that would go ahead anyways
(like selling off the heavy maintenance operation), with the hoope that
once Alitalia is shutdown, the unions will come to their senses and
agree. Perhaps a 3-7 day shutdown.
The other option is to go ahead with the deal, but without any
employees. Assets would be sold to the new holding company who would
then buy Air One and no Air One employee would loose their job, and the
new company would takeover the Alitalia name and routes. New employees
would be hired as new employees without the need to honour anty previous
old-Alitalia contracts.
If this is what business is like in Italy, imagine what their TV soap
operas must be like !!!
JF Mezei
flights/aircraft on Monday because it is allegedly having problems
buying fuel, and the government may pull its operating licence.
Italy's civil aviation authority Enac said Alitalia's licence to
operate was in jeopardy.
"If there is no solution very soon that guarantees the continuity of the
carrier's operations, the basis on which Enac issued Alitalia with a
six-month provisional licence will no longer be met," Enac said in a
statement.
Government can't inject more money. But I guess they could pass some law
to either force the unions to accept, or void all contracts and let the
new owners rte-hire whatever number of Alitalia employees it needs.
Either way, a shutdown of about a week is probably going to happen. (It
happened to Swissair).
JF Mezei
despite all the threaths. Last week, Alitalia was to be liquidated on
friday if by thursday, the unions didn't agree. They didn't agree and
the deadline was magically extended.
Fast forward to yesterday (thursday):
##
ROME (Reuters) - The business group that had made a rescue bid for
Alitalia withdrew the offer on Thursday, after unions refused to accept
its plan -- something the airline's special administrator has said would
lead to liquidation.
All members of the CAI consortium voted to abandon the offer -- a blow
to Prime Minister Silvio Berlusconi, who used his business connections
and political sway to persuade investors to bid for the flag carrier and
keep it Italian.
##
My guess is that the group (and Berlusconi) have always known that the
unions would refuse the offer no matter what. This made this big to pyt
the foot in the door. And now, Alitalia will declare bankrucy, stop
operations, fire all employees. From that point on, I think that the CAI
consortium may re-emerge and buy the assets without any hindrance from
employees and merge them into Air One and let Air One hire new employees
to restart the former Alitalia services in a smaller scale.
JF Mezei
Italian regulator is giving Alitalia 10 days before suspending its
operating license. Another deadline that will pass and be ignored, or
will they eventually get serious and put Alitalia out of its misery ?
It appears that the pilots applauded when they heard that the CAI group
had pulled out of the deal, chanting something akin to "better dead than
work under terrible conditions".
So now, we have until the end of September to hopefully hear the season
finale of "As the Alitalia world turns".
Meanwhile, I suspect bookings will drop big time. One would have to be
pretty loyal to ALitalia to make bookings with them right now. And
considering the protests and flight cancellations that have happened,
even businessmen on one day trips might not be interested in Alitalia if
it is seen to be unreliable.
JF Mezei
> Italian regulator is giving Alitalia 10 days before suspending its
> operating license.
Now, it apperas that the italian regulator may pull the plug (operating
licence) this coming Thursday if there is no progress.
But...
The bankrupcy administrator has bought advertising in some major
european newspapers today to beg someone to come forward and save
Alitalia. Deadline set by this letter is Sept 30 at 12:00am.
Some companies have already expressed interest in some assets. Some
swiss managements company says it would be interested in buying half of
the 30 MD-82s and ATR-72s and leasing the rest to run flights between
Italy and the Balkans/Eastern Europe.
Pilots, who had refused the CAI plan, have now expressed willingness to
contribute $340 million to save alitalia as long as the new owner does
not impose cuts and layoffs like previous plans did.
The alitalia corporate press releases on its survival are at:
http://corporate.alitalia.com/en/amstraordinaria/index.htm
Any bets on how long the employees will strike to protest the shutdown
of Alitalia ?
JF Mezei
Burlesconi got the unions in his "office" and probably gave them quite a
talk. 4 unions have now changed their mind and agreed to support the CAI
buyout.
As a result, CAI has agreed to re-instate its offer with a new deadline
of Oct 15 for all unions to ratify.
The civil aviation authority has seen enough progress to allow Alitalia
to continue flying for now.
The new information is that it is now publically stated that the reborn
Alitalia will need foreign airline support to support. AF-KLM is said to
be ready to take a 10 to 20% state in the new Alitalia.
Pilots and FA unions are not part of the 4 unions and they must change
their mind and support the plan.