Tuesday, May 2, 2017

Alitalia: files for bankruptcy...again

NOTE:   Since I wrote this article the Italian government has agreed to bankruptcy whereby the airline will either be sold (unlikely) or be wound down -- another 12,000 jobs are gone! 

Old joke; How do you make a small fortune in the airline industry?  Start with a large one!

Europe suffers from too many legacy sovereign airlines that simply cannot compete with the new players, or older players that decided to make hard decisions.  While I too would like to earn a Euro 75,000.00 to be a flight attendants its simply not economical, especially one that is restricted to the total number of hours he/she can fly.  This may sound callous but its the truth, in large part a flight attendants is paid a large  multiple of what a a waitress would get.

I focus on salaries and work rules, which are a problem, but its also a culture problem.  I flew Alitalia many times and I was never impressed with the product -- its not a question of how new the equipment was, rather its a question of attitude both on the ground and in the air.  There is a saying as the front so the back -- I am sure that the problems of the customer end of the business reflected similar problems at head office.

What will happen to Alitalia?  I don't know, but one thing for sure is that Etihad Airways is done and gone, and the fact that the employees rejected the latest changes to the airlines management structure is a sign that its time to wind up the airline -- and do it fast too, the routes that Alitalia owns are valuable, right now.

It was announced that the Italian government has given a Euro 400 MM debtor in possession line of credit to keep the airline flying, but like SABENA did a few years ago, its time for Alitalia to take a long walk off a short pier.

This may sound callous, but in fact only a few European airline can survive the brutal competition of new operators; British Airways/Iberia, Air France/KLM, Lufthansa the others no so much I am still amazed that TAP Air Portugal and Olympic airways are still around. The legacy airlines suffer from the usual problem of historical support by governments, in fact many still feel they are civil servants.

The ending of Alitalia is not a drama, the government will assume the pension liabilities and those still interested in flying will re-cycle in other carriers.  While there has been pilot and crew abuse from new startup carriers in the past, the balance between pilot/crew and airlines' demand has stabilized at more reasonable wages (and work rules).

In the greater debate of Europe Vs. Italy the end of Alitalia can be see as a good excuse to get out of Europe, but when Italian see the full mess that is the airline, the fact that this would be the 4th or 5th rescue of the airline, most Italians will agree, lets give up the ghost and do something else with our money.


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