Alitalia news: auction collapses, government mulls options

[Globaliser]

that really not necessarily true. Southwest is cheaper no frills and is not something wrong. I don't think anything is wrong with Alitalia and I would bet the Italian government doesn't want to close it down. They would rather sell it and have someone else close it down in a year or two.....

I did say "often", not "always". So if an airline ticket is cheap, it's worth asking a lot of questions about why.

 

Southwest isn't a good example because it's very often not cheaper than its competition.

 

What is indisputable is that there's plenty wrong with Alitalia. It vies with Olympic for the title of "sick man of Europe". In any rational world, both airlines would have been long dead and buried. Despite all the efforts made by successive waves of top management, AZ continues to haemorrhage money. It really is a walking disaster area, and the fact that someone is likely to close it down sooner or later is ample testament to that.

[Globaliser]

The FT reports:-

 

Air France-KLM bids for Alitalia

By Kevin Done in London and Guy Dinmore in Rome

Published: March 16 2008 16:14 | Last updated: March 16 2008 16:14

 

Air France-KLM made a conditional takeover bid for Alitalia at the weekend, which was given immediate backing at a meeting on Saturday of the board of the nearly bankrupt, state-dominated, Italian flag carrier.

 

The all-share bid values the Alitalia equity at only €139m or 10 cents a share based on an exchange of one Air France-KLM share for 160 Alitalia shares. The bid was pitched much lower than expected and was far below the Alitalia closing price on Friday at an all-time low of 54 cents a share.

 

Air France-KLM said that it would also acquire outstanding Alitalia convertible bonds at the current market price of 31 cents per bond for a total of €608m, and it committed itself to fully underwriting a €1bn injection of fresh equity into the struggling Italian airline.

 

At the end of January Alitalia had a net debt of €1.28bn and only €282m of cash and short-term financial credits.

 

...

 

Even though the current Italian government is likely to agree early this week to the sale, several obstacles to a takeover remain.

 

Initial reactions from the unions on Sunday were hostile ahead of a meeting with Air France-KLM on Tuesday. The French carrier has angered unions by refusing to involve them in consultations and by presenting the offer as take it or leave it.

 

...

 

A big obstacle, which one government source described as the "sword of Damocles", is a claim for damages of more than €1bn filed earlier this year against Alitalia by SEA, the company that manages Milan's Malpensa airport. The source said Air France-KLM had asked the government to get rid of this claim but this was not possible.

 

Should the sale fall through, Alitalia could go bankrupt within two months, and risk dragging Malpensa with it, the source said.

 

The lower than expected offer price could serve to further politicise the controversial Alitalia sell-off ahead of the mid-April general elections.

 

The centre-left government, which says bankruptcy is the likely alternative to the Air France-KLM offer, is set to meet on Monday to consider the bid.

 

The sale can go ahead only with a green light from whoever wins the election, however, and Silvio Berlusconi, the centre-right opposition leader who is maintaining a comfortable lead in the polls, has already been openly critical of the idea of selling Alitalia to Air France.

 

The lower than expected offer price might also encourage a counter bid from Air One, the much smaller rival Italian carrier owned by the Toto construction group.

 

...

[patl95]

I know we should have read some of this BEFORE we booked with AlItalia. But it was the best we could find for a direct flight to Rome from Boston so we went for it.

 

I was wondering if anyone knew whether the AlItalia planes had outlets at the seats (I know if they have them they're the kind that need an adaptor...we have the adaptor, I'm just wondering if it is worth bringing). We're flying with a 6 year old so I'm hoping we can plug in her dvd player to keep her entertained on the flight back.

 

Thanks in advance!

 

Patty

[Globaliser]

Even though the current Italian government is likely to agree early this week to the sale, several obstacles to a takeover remain.

 

Initial reactions from the unions on Sunday were hostile ahead of a meeting with Air France-KLM on Tuesday. The French carrier has angered unions by refusing to involve them in consultations and by presenting the offer as take it or leave it.

Well, this one's done it!

 

BBC News reports:-

Alitalia boss quits as talks end

 

Air France-KLM's takeover of Alitalia has been abandoned and the Italian airline's chairman has resigned.

 

Maurizio Prato stood down after the breakdown of talks between Alitalia's unions and Air France-KLM management.

 

He had warned the unions that Alitalia risked going bankrupt if they did not accept the deal.

 

...

 

Administration risk

 

Earlier, Economy Minister Tommaso Padoa-Schioppa said the only alternative to the Air France-KLM offer would be to put Alitalia into emergency administration.

 

...

 

Alitalia has called a board meeting for Thursday, "which will decide the appropriate steps", the airline said in a statement.

 

...

[Globaliser]

And now that I can get the full story, this is what the FT is saying this evening:-

 

Alitalia on verge of bankruptcy as talks end

 

By Guy Dinmore in Rome

Published: April 2 2008 18:49 | Last updated: April 2 2008 18:49

 

Alitalia, the Italian airline, was Wednesday night left considering whether to start bankruptcy proceedings after Air France-KLM pulled out of takeover talks.

 

Maurizio Prato, Alitalia chairman, resigned after talks with trade unions broke down over proposed job cuts. “This airline is cursed. Only an exorcist can save it,” he was quoted as saying by a union official.

 

Jean-Cyril Spinetta, head of Air France-KLM, flew out of Rome, issuing a statement that conditions no longer existed for negotiations. He blamed the unions, saying their proposals would have left Alitalia still burdened by heavy lossmaking activities.

 

The talks were billed as a final effort to meet a midnight deadline for agreement set by management. However, Mr Spinetta indicated that his offer remained on the table should the nine unions have a change of heart.

 

Earlier in the day, Tommaso Padoa-Schioppa, finance minister, warned the alternative to an Air France-KLM takeover would be the appointment of a special commissioner to initiate bankruptcy proceedings.

 

The government, which had accepted the offer for its 49.9 per cent share of Alitalia, would deny a requested €300m (£237m) bridging loan to Alitalia if the deal fell through. The minister said: “These are decisive hours.”

 

Alitalia’s board is to meet Thursday to decide whether to appoint its fourth chairman within a year and struggle on with dwindling reserves, or launch bankruptcy proceedings. These begin by halting debt payments.

 

...

[FlyerTalker]

Reminds me of the machinists at Eastern who proudly wore T-shirts that said: "Full pay til the last day".

 

That last day came fairly soon for them, and many never made up for the loss of their EA jobs. Seems that Italian unions don't bother to study history.

[Krazy4Kruisin']

I am a little more than scared about this situation now. We are flying from Newark to Rome on Continental, but then connecting on Alitalia to Venice. This is on May 21. After the cruise, we are doing the reverse. If they declare bankruptcy, what will happen to our flight? I don't know whether I should call Continental or Alitalia. And will either one be able to help me? I would like to change our reservation to not fly Alitalia, but we used frequent flyer miles to fly 1st class free and I don't know what can be done to make changes at this point. :confused:

[Globaliser]

Seems that Italian unions don't bother to study history.

Unfortunately for the unions (or their members), I fear that it may ironically be because they study too much history and not enough current affairs.

 

Historically, the unions would have been able to rely on the government bailing out the airline, once again. In that era, it was inconceivable that there could have been an Italy without Alitalia.

 

But today the legal and political landscape is different. It would probably be completely illegal for the government to even try to bail out the airline, and the current government's response shows that they recognise that.

 

But whether a new government might recognise that and act accordingly, or might instead play a game of legal brinksmanship with the European Commission to keep the airline alive for another couple of years with the backing of illegal State aid, is anyone's guess.

 

The unions may be counting on the latter, on the basis that historically that's how it's always worked. But more study of current affairs might show them that it's much less likely today than it was in the "good old days".

 

Me, I'm cheering on the unions. It's about time this airline shut its doors for good. :D

[Globaliser]

If they declare bankruptcy' date=' what will happen to our flight? I don't know whether I should call Continental or Alitalia.[/quote']It's impossible to know now what will happen if they go into administration, or bankruptcy, or if something else happens.

 

Whose miles have you used? Who did you book through? You could do some research into possible alternatives, then call up that airline and see what you can be rebooked onto now. But you should expect to have to pay whatever penalties and fees are attached to a voluntary change, just as if you'd simply changed your mind, because nothing has yet happened to Alitalia.

[Globaliser]

One of the Reuters bulletins this afternoon:

Alitalia names new chairman, still eyes Air France

 

Thu Apr 3, 2008 3:30pm EDT

 

ROME (Reuters) - Alitalia on Thursday named Aristide Police as new chairman to replace Maurizio Prato and said Air France-KLM was still its most "suitable" partner.

 

Prato resigned after the French airline backed out of a deal to buy Italy's ailing flagship carrier on Wednesday following the breakdown of talks with Alitalia's unions.

 

Alitalia said after a board meeting that it still considered the Air France deal "suitable to ensure Alitalia can return to profitable growth."

 

The board called a new meeting for April 8 and said by that date it would "evaluate the existence of the necessary conditions to continue doing business."

It sounds to me like the board is concerned that the law may require them to shut down on 8 April.

[nomoredyess]

One of the Reuters bulletins this afternoon:It sounds to me like the board is concerned that the law may require them to shut down on 8 April.

 

 

I think that would actually be the best thing possible, before they strike or something else and we all end up stranded.

 

I talked to the company I booked through, and they said Alitalia is holding strong and that the only way I could get my money back even if they file bankrupcy is to challenge the charge on your credit card, because they did not think Alitalia is going to help stranded passengers!!! There customer service is ridiculous, so good luck trying to have a conversation, your better off looking at the wall and having a conversation with it!!! No wonder they are going bankrupt:rolleyes: , their product sucks!!!

 

This sucks, there is too much riding on my cruise to have to worry about this crap!!!:mad:

[ItaliaAmerCruzLady]

We just came from our TA and she informed us that she has us "on hold " with Delta, pending the decision this coming week. Dont know if this would be a non-stop, like we booked with Alitalia, but, whatever, we may have to consider a little different itinerary. We were supposed to be flying non-stop, from Jfk to Rome , end of June, (gives us a little wiggle room)

[Tiffnut]

I just bought a second set of tickets from British Airways for my flight from Venice to London. I am not going to let the possibility of not having my flight get me where I need to be go ruin my vacation. I figure Alitalia can just keep the $268. It won't be worth the headache to try to get it back. What did I learn? Do my homework.

[nomoredyess]

We just came from our TA and she informed us that she has us "on hold " with Delta, pending the decision this coming week. Dont know if this would be a non-stop, like we booked with Alitalia, but, whatever, we may have to consider a little different itinerary. We were supposed to be flying non-stop, from Jfk to Rome , end of June, (gives us a little wiggle room)

 

 

So on hold? What exactly does that mean? Did you pay. I am in the military, so I booked through a govt travel agent, and I feel like they are just kinda screwin me over now. We payed $900/pp RT from JFK to FCO. When I called Friday, they told me it was $1600/pp to change it!!!

[nomoredyess]

I just bought a second set of tickets from British Airways for my flight from Venice to London. I am not going to let the possibility of not having my flight get me where I need to be go ruin my vacation. I figure Alitalia can just keep the $268. It won't be worth the headache to try to get it back. What did I learn? Do my homework.

 

Amen to that!!!! I almost hope they just stop flights on the 8th, so we can all just get our money and chalk this one up as lesson learned!!

[Globaliser]

... I feel like they are just kinda screwin me over now. We payed $900/pp RT from JFK to FCO. When I called Friday, they told me it was $1600/pp to change it!!!

I don't think that anyone's screwing you over.

 

Nothing has yet happened to Alitalia operations. So if you try to make any change now, it'll be the same as if you'd just changed your mind about which dates you want to travel on. When you do, the tickets don't just get moved - they have to be repriced according to what fares are available for the dates on which you want to travel, and in compliance with the rules of your original ticket.

 

So I suspect that what you have been quoted is simply the cost of making that "normal" change now, suggesting that only expensive tickets are available on the flights that you want to change to.

[ty1970]

Globiliser, Any more word on Alitalia? I was thinking about flying them next year JFK to FCO, because I have kids and would like an overnight, direct flight. (which they seemed to have alot of) But it doesn't seem like a good idea to fly them now. I have about a month before the tickets open up. Do you have any suggestions?:)

 

Dude in a year they could be like TWA and PanAm. I'd suggest the many more secure carriers. Sure they are a bit more expensive, perhaps there is a correlation between carriers that are more expensive and don't end up out of business?

[nomoredyess]

I don't think that anyone's screwing you over.

 

Nothing has yet happened to Alitalia operations. So if you try to make any change now, it'll be the same as if you'd just changed your mind about which dates you want to travel on. When you do, the tickets don't just get moved - they have to be repriced according to what fares are available for the dates on which you want to travel, and in compliance with the rules of your original ticket.

 

So I suspect that what you have been quoted is simply the cost of making that "normal" change now, suggesting that only expensive tickets are available on the flights that you want to change to.

 

Just another reason to hope they cancel flights on the 8th I guess!!!

[ItaliaAmerCruzLady]

Our TA explained that we are on hold for Delta, but we did not pay, they will only hold seats for 2 days,so she has to reapply our hold status every few days. She mentioned that something was supposed to be decided by Wednesday. We are just waiting to see what happens. We cant just let that money go, it was 2000.00 and more than we can afford to just forget about and rebook.

Keeping our fingers crossed, and hope we still get the same non-stop flight as the one we already paid for.:(

[nomoredyess]

Our TA explained that we are on hold for Delta, but we did not pay, they will only hold seats for 2 days,so she has to reapply our hold status every few days. She mentioned that something was supposed to be decided by Wednesday. We are just waiting to see what happens. We cant just let that money go, it was 2000.00 and more than we can afford to just forget about and rebook.

Keeping our fingers crossed, and hope we still get the same non-stop flight as the one we already paid for.:(

 

I couldnt agree with you more!!! We payed almost 2,000.00 as well. I am not willing to chalk that one up as a loss and just walk away!!

[cruzfvr]

I have Alitalia for my May flight as well. My daughter is already in Italy, so she has used half her ticket. I checked to see what the penalty is for just canceling, and it is $300 for my ticket. They cannot do anything about my daughter's because she has already used part of hers. I do not want to lose money, but I am seriously thinking of just paying the penalty, and booking with another airline. It is very stressful worrying whether Alitalia is going to let Air France buy them out, or continue on their own, or just quit operations all together. I am so excited about my upcoming cruise, and this is annoying to say the least. ~Debbi

[ItaliaAmerCruzLady]

As per our TA, it is my understanding, that Air France is out of the running, and had decided not to buy out Alitalia. It is more a matter now of if it goes bankrupt, or someone else , like maybe the government bails them out with some funds.

Globalizer, you probably know the lingo better than me. Any more info?:confused:

[nomoredyess]

I have Alitalia for my May flight as well. My daughter is already in Italy, so she has used half her ticket. I checked to see what the penalty is for just canceling, and it is $300 for my ticket. They cannot do anything about my daughter's because she has already used part of hers. I do not want to lose money, but I am seriously thinking of just paying the penalty, and booking with another airline. It is very stressful worrying whether Alitalia is going to let Air France buy them out, or continue on their own, or just quit operations all together. I am so excited about my upcoming cruise, and this is annoying to say the least. ~Debbi

 

I would say give it a week, they meet today, we should know more soon!!

[Globaliser]

As per our TA, it is my understanding, that Air France is out of the running, and had decided not to buy out Alitalia. It is more a matter now of if it goes bankrupt, or someone else , like maybe the government bails them out with some funds.

I know that many people are anxious for some news of today's events, even though there's not a huge amount to say. The board has decided that the airline has enough cash to keep operating "in the very short term" (I think the Italian phrase being translated is "nel brevissimo termine"). This is enough to tide the airline over until after the general election, preceded by a meeting between the unions and the Italian government on Thursday, to see whether Air France-KLM might come back to the negotiating table next week.

 

AF's board yesterday approved management's decision to withdraw from the talks with AZ, but the terms of AF's statement do not expressly rule out them coming back. AZ's unions are starting to dampen down their rhetoric, but it remains to be seen whether AF really has completely walked away.

 

However, Silvio Berlusconi is regarded as likely to win the election. He has just been quoted as saying "I hope the brainless talks with Air France on the future of Alitalia will end. Only then will the many business people who have told me they want to intervene come forward." But no Italian contenders have come forward, so who these may be remains to be seen.

 

See this Guardian story (from Reuters), this AFP story, and this earlier Forbes story (from Thomson Financial News) for some recent background.

 

For anyone who reads Italian, the company's press release after today's meeting is here (PDF).

 

But one thing is for sure: the Italian government cannot legally bail out the airline. I wouldn't put it past Berlusconi to try, but there will be uproar if he does.

[ItaliaAmerCruzLady]

Anyone hear anything new? Any dicisions made yet?:confused: