September 18, 2008

Union Intransigence Could Prove the Death Knell for Alitalia

Alitalia cancelled 40 flights yesterday as the troubled Italian airline continued bleeding money.

And the government summoned restless unions for what could be the last round of talks to save it.

The airline was forced to cancel flights because of a strike by a small union protesting a rescue plan but a spokesman said it was still able to buy fuel.

Alitalia, a symbol of Italy's national identity for more than six decades, risks being liquidated after years of political interference, labour disputes, mismanagement and soaring fuel costs.

The state-controlled airline is losing more than EUR2 million a day and had EUR1.17 billion of debt in July.

Its bankruptcy commissioner has warned Alitalia is running out of cash for fuel. It warned planes could be grounded if unions do not agree to a buyout offer by investors.

Labour Minister Maurizio Sacconi called unions to meet the head of the investor group, known as CAI, at the prime minister's office. More than 3,000 workers would lose jobs under the rescue plan.

"This is the last slot for Alitalia's takeoff," Mr Sacconi told reporters.

Deadlines have come and gone and Mr Sacconi said the very last moment for unions to sign is Thursday, when the consortium's board decides whether to pursue the buyout. CAI's chairman Roberto Colaninno asked the government to summon the nine unions to explain his position, Sacconi said.

The small CUB union whose members struck onWednesday opposes the plan and is boycotting talks. But CUB support is not critical.

"This is a massacre," said CUB union leader Fabio Frati.

Transport Minister Altero Matteoli criticised the union for striking when the carrier can barely afford to keep flying.

"Calling a strike during negotiations shows great irresponsibility. The parties are negotiating, the government is directly involved," Mr Matteoli said.

Underscoring the problems, Greece said onWednesday it would shut its ailing state carrier Olympic Airlines and relaunch under a new structure. Some 8,000 employees are expected to lose jobs.

Alitalia unions are worried about job and wage cuts in a rescue plan that would see investors snap up only the profitable parts of the airline before relaunching as a slimmed-down carrier.

An Alitalia collapse would be a huge blow for Prime Minister Silvio Berlusconi, a business mogul who promised voters who elected him in April he would use his business contacts to find an Italian buyer.

Mr Berlusconi has offered special payouts to 3,250 workers.

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