Alitalia news: auction collapses, government mulls options

[tada]

What really stinks to me is that we were booked to fly out of Rome on 10/17, the day they intend on a 24 hours strike. We are travelling light with one bag, and I am about to book one way tickets from Rome to London on RyanAir. Is this a good idea?

[Globaliser]

We are travelling light with one bag, and I am about to book one way tickets from Rome to London on RyanAir. Is this a good idea?

That depends very much on your perception of value, and how light you really are. Don't forget that even with one bag, travelling on Ryanair means that you must also pay the airport check-in fee of €5 and the first checked bag fee of €20. If that bag is over 15 kg, you will also have to pay €15 per kg excess baggage.

[tada]

We each have a 21" rolling carry on suitcase. Ryanair says one carry one per person is allowed. Even with the 5 GBP surcharge at checkin, both of us can fly the one way for $150 total.

 

I'm not so much concerned about RyanAir, more about Alitialia announcing a strike. I just spoke with Alitialia and they say everything is confirmed and they do not know of any strike.

 

I just don't want to get caught in Rome and miss connections. Because if your flight is cancelled, you will not be on the next flight, as it is already full.

[Globaliser]

As planned, Alitalia has now filed for bankruptcy protection. BBC reports:-

Alitalia seeks bankruptcy measure

 

Troubled Italian airline Alitalia has applied for bankruptcy protection as it tries to agree a deal to ensure its long-term survival.

 

The carrier has sought court protection from its creditors, effectively declaring itself insolvent.

 

An administrator will be appointed to handle the process, with flights continuing while the firm plans a radical overhaul of its operations.

 

Losing 2m euros (£1.6m) a day, Alitalia has survived on a 300m-euro state loan.

 

...

 

The airline's perilous position was put into perspective by Roberto Colaninno, appointed to take charge of the new entity that emerges from the restructuring.

 

"No one can buy Alitalia in the state it's in," he told La Repubblica newspaper.

 

"With all respect, I am not Merlin the magician. The business is toast. It doesn't exist any more. There's nothing left."

 

...

Colaninno's comment evokes memories of the outgoing CEO who declared that Alitalia needed an exorcist. We will have to wait and see what the unions do now.

[Globaliser]

We will have to wait and see what the unions do now.

The "bankruptcy commissioner" (it sounds like this is the person holding the position known elsewhere as administrator or trustee in bankruptcy) appears to be playing hardball with the unions now. Yesterday, he warned the unions that they either backed the rescue plan by today (Thursday) or he would begin shutting the airline down. Reuters (via Airwise) reports:-

Alitalia Commissioner Warns Unions Of Liquidation

 

September 10, 2008

 

Alitalia's bankruptcy commissioner warned unions on Wednesday he would be forced to terminate their work contracts and liquidate the carrier unless they backed its latest rescue plan, the airline said.

 

Italy has given the bankrupt airline's powerful unions a Thursday deadline to back the plan, under which an Italian investor group would relaunch Alitalia as a smaller airline, cutting thousands of jobs and reducing salaries.

 

"The commissioner has told union representatives that he will begin the termination of all group contracts and agreements still in force," the airline said in a statement.

 

Union leaders -- who are split over whether to approve the rescue plan -- have been called to the Employment Ministry at 10 am (0800 GMT) on Thursday for the final phase of talks, a union source said.

 

There has been speculation that the talks could run past September 11 and into the weekend, despite local media reports suggesting that the Thursday deadline was firm.

 

One powerful Italian union has backed the plan but the airline's pilots and flight assistants have condemned it.

 

"We have our backs against the wall and we all know it," said Giuseppe Caronia, secretary-general of the Uil union, according to Ansa news agency.

 

"But putting your adversary in a corner can spur dangerous reactions, the reaction of one in the corner can be irrational."

 

...

[Globaliser]

AFP reports:-

Investors drop Alitalia talks, blaming unions over 'dramatic' crisis

 

MILAN (AFP) — Italian investors pulled out of talks to rescue the national airline Alitalia on Friday, saying unions refused to face up to the "dramatic" crisis in the company and the need for cutbacks.

 

Labour Minister Maurizio Sacconi said the differences "makes one fear the worst," in remarks after all-night talks were suspended but before the investors said they were pulling out.

 

A spokesman for the investors said they had decided to pull out of the talks, "acting on the fact that after seven days of meetings, the conditions no longer exist for the negotiations to continue."

 

He observed: "Clearly (the unions) do not realise what a dramatic situation Alitalia is in and the need for profound changes from the past as required by the rescue plan."

 

Alitalia's special administrator Augusto Fantozzi, appointed last month when the airline asked to be declared insolvent, had warned unions on Wednesday that he would begin to dismiss workers if a deal on a new labour contract were not reached.

 

He has also warned that in the absence of a deal with Alitalia unions, the company, which by the end of September will have only 30 million to 50 million euros (42-70 million dollars) at its disposal, will fail.

 

The talks between investors and unions over restructuring conditions to pull the airline out of a critical financial crisis, and years of distress, hit deadlock over cuts in pay and holidays.

 

The group of Italian investors, formed after Air France-KLM pulled out of takeover talks for similar reasons, also wanted to apply a single labour contract.

 

A further issue on the restructuring agenda was proposed job cuts in the range of 3,250-4,000. The group employs 11,100 people in the air transportation division and 8,300 in maintenance and service operations.

 

The Italian state owns 49.9 percent of the airline which has been surviving on a state loan of 300 million euros made at the end of April.

 

The alliance of Italian business people interested in taking over Alitalia is called CAI, standing for Italian Airline Company in Italian.

 

Meanwhile the Financial Times newspaper in London reported on Friday that Lufthansa airline of Germany, and low-cost carriers easyJet and Ryanair were moving into the Italian domestic market to pick up business while Alitalia was in crisis.

 

The problems at Alitalia also have implications for the main airports at Rome and Milan.

[Globaliser]

Further reports from Forbes, Reuters and the IHT.

[zorrosuncle]

Greetings -- I am on a Costa Air/Sea program with two Alitalia flights at the back end of the cruise. Ready to leave in 3 weeks. What is Costa's obligation to me if Alitalia folds tonight, in that no part of this trip has started? Do they have an obligation to provide me with air/sea? That is what I paid out for.

 

Z U

[ab0si]

Greetings -- I am on a Costa Air/Sea program with two Alitalia flights at the back end of the cruise. Ready to leave in 3 weeks. What is Costa's obligation to me if Alitalia folds tonight, in that no part of this trip has started? Do they have an obligation to provide me with air/sea? That is what I paid out for.

 

Z U

 

Do you have a copy of the contract? It all depends on the wording and the jurisdiction.

[zorrosuncle]

Do you have a copy of the contract? It all depends on the wording and the jurisdiction.

Greetings -- My ticket doesn't show the air/sea contract. I found it on the internet under terms and conditions. I feel that the purchase of air/sea for me by Costa mandates due diligence on the part of Costa to select a reliable carrier in the first place. It is no secret that booking on Alitalia has been extremely risky for several months, now, and Costa should have known better. They probably have a fallback carrier in an emergency.

Z U

[Globaliser]

I feel that the purchase of air/sea for me by Costa mandates due diligence on the part of Costa to select a reliable carrier in the first place.

You may feel that, but feelings don't dictate legal realities.

 

Whether Costa was under any such obligation depends on the terms of the contract. You might want to read this sticky thread for some general observations about cruise line-arranged air travel. As always, if you want full control, you either need to make sure that the cruise line does exactly what you tell it to do, or organise it yourself. Leaving anything to someone else's discretion always injects an element of risk.

[Globaliser]

The news at present is difficult to discern, as events are moving quickly and English-language news is lagging. But this article from The Guardian suggests that Berlusconi has returned to Rome to try to deal with the crisis; there was a meeting at 1400L (1200Z) between the administrator and the unions; the investors will not budge an inch; and the administrator will not declare insolvency "this evening". But it is possible that tonight is Alitalia's last night.

[Globaliser]

The administrator has told unions that Alitalia cannot guarantee flights beyond tomorrow (Sunday) because it has no more money with which to buy fuel. BBC News reports:-

Alitalia 'running out of fuel'

 

Italy's troubled national airline, Alitalia, cannot guarantee flights beyond Sunday because of a lack of funds to buy fuel, a top official says.

 

"Until the end of tomorrow, flights are guaranteed. From Monday, they are not," Augusto Fantozzi, Alitalia's bankruptcy administrator, told unions.

 

Mr Fantozzi was speaking as he called the unions to emergency talks a day after the latest session broke down.

 

...

[jeef_boner]

Great. Booked with this union-dominated bunch of idiots to fly to Rome late September to join a cruise. Looks like I'll have to make alternative arrangements for the wife and I.

 

Guess what travel insurance doesn't cover? that's right - airline collapse. If we'd known about this when booking I'd never have chosen this outfit. I can guarantee my money's gone on the last barrel of fuel they bought, and I'll be left high and dry. Pathetic that nobody in authority had the nuts to pull the pin on Alitalia earlier.

[wrp96]

If you booked with a credit card, if Alitalia collapses, as soon as it happens contact your credit card company.

[jeef_boner]

If you booked with a credit card, if Alitalia collapses, as soon as it happens contact your credit card company.

 

That's a good tip - hadn't thought of that. Did booking last year so on basis of this thread (very comprehensive!) was going to go after our travel agent for not making us aware of potential problems later. Mastercard would be a cleaner take though.

 

Hope they sort themselves out - at least for another couple of weeks!

[Globaliser]

Overnight, four of the nine unions at Alitalia have signed an outline of a deal. But it remains unclear whether the other five unions will agree. Click here for a Reuters report.

[sailingkiwi]

 

Guess what travel insurance doesn't cover? that's right - airline collapse. If we'd known about this when booking I'd never have chosen this outfit. I can guarantee my money's gone on the last barrel of fuel they bought, and I'll be left high and dry. Pathetic that nobody in authority had the nuts to pull the pin on Alitalia earlier.

 

The collapse of XL last Friday prompted us to check our travel insurance policy, and no it doesn't cover bankruptcy either. Apparently, this is not uncommon - although in the UK there are some policies that do cover this eventuality.

 

If you booked with a credit card, if Alitalia collapses, as soon as it happens contact your credit card company.

 

This helps with the refund of the costs of the flight, but not with any additional costs that you may face (extra accommodation or increased flight costs).

 

I do wonder if there should be an article/sticky somewhere with "what to do if your airline goes under....":eek:

[jeef_boner]

Looks like Berlusconi will carry the day and flights will be honoured. This being Italy we're talking about, all that could change within 24 hours!

[Globaliser]

Well, the fat lady has neither appeared nor cancelled her booking yet!

 

This morning, the FT reports:-

Battered Alitalia stays aloft on a wing and discounted fuel

 

By Guy Dinmore

Published: September 17 2008 03:00 | Last updated: September 17 2008 03:00

 

While ministers, industrialists and disunited union leaders wrangle over the future of Alitalia, taking brinkmanship to the edge, Italy's loss-making flag carrier has nonetheless remained aloft and, according to all parties involved, still has a chance of surviving in some form under new ownership.

 

Industry sources say the government has ensured that Eni, the partly state-owned energy group, has kept the pumps open. There were official declarations at the weekend that Alitalia was having problems getting fuel, after dire warnings of deadlines and bankruptcy a week ago.

 

One person in the industry said Eni was acting according to its contract, which allowed 15 to 20 per cent of credit for Alitalia. But, depending on the actions of other international fuel suppliers, including Shell, Exxon and Total, the airline could only keep going until Friday.

 

Five unions that represent Alitalia's pilots and flight assistants yesterday continued to reject an offer for part of the airline's assets by a consortium of some 16 Italian investors that would entail about 1,000 job losses for pilots and 1,600 for flight assistants.

 

Four union federations representing ground staff and maintenance workers have signalled their acceptance of the plan, however. Yesterday the nine unions failed to meet among themselves to hammer out a common position.

 

...

Today (Wednesday) a small union's strike will cause Alitalia to cancel 40 flights - but this is not to do with fuel problems.

 

And just to add some (probably irrelevant) spice to the story, Alitalia was raided yesterday by the revenue police:-

Airlines: Police raid adds new twist to Alitalia saga

 

John Hooper in Rome

The Guardian, Wednesday September 17 2008

 

It is already the business story with everything: political gambles, patriotic sensitivities, all-night talks in smoky rooms and uniformed flight attendants chanting protest slogans beneath the prime minister's window. All that was missing from the saga of Alitalia's demise and planned rebirth was the police and a whiff of suspected illegality.

 

No longer. Officers of Italy's revenue guard turned up yesterday at the Rome headquarters of its bankrupt flag-carrier and walked out with 10 years' worth of company accounts. The operation was mounted by prosecutors investigating the airline's demise.

 

They opened an inquiry after the company sought bankruptcy protection on August 29, acting on a petition from a consumer association, Codacons, which represents shareholders and employees.

 

...

[zorrosuncle]

Appears that the ultimate ultimatum (hmmmm) has now been given and the unions must agree to the new plan by about 7:50 AM New York time tomorrow. If there is no agreement, CAI is withdrawing their offer and Alitalia is no more. I checked the cost of purchasing a one-way ticket from Genoa to New York at the back end of my cruise, and frankly it is bvetween $1850 and $2700. I will probably have to throw away the value of the cruise, because I can't afford putting that much more money into it.

 

Frankly, I would have thought that the cruiseline would have picked a more reliable air partner, there. (They are openly advertising for an air/sea manager). Afterall, Alitalia has been operating with a provisional license for the last six months because of their finances which should have put any air/sea manager on notice.

Z U

[ab0si]

Costa is an Italian company (although owned by Carnival plc)... why would you expect them to NOT to have used Alitalia?

 

Aer Lingus flies Milan (Linate which unlike the larger Malpensa, is very close to the city center) to New York via Dublin for a lot less money than you quote. they also sell "real" one-way tickets at 1/2 the cost of round trip tickets. It is easy enough to catch a train to Milano from Genova.

[zorrosuncle]

Costa is an Italian company (although owned by Carnival plc)... why would you expect them to NOT to have used Alitalia?

 

 

Ans. Because they have an obligation to put their customer ahead of any allegiances that would interfere with that. (Mktg 101) They are not just selling a solitary cruise but developing a longterm relationship and maintaining their good reputation.

 

I broached this very question to my personal cruise planner at Costa when I booked; I was told not to worry because Costa had an obligation to get me there and back. I am still confident that Costa will do the right thing.

 

Z U

[zorrosuncle]

If Alitalia were to fold, and a customer were to approach Costa for a booking on the same ship as I, Costa would be booking that customer on another airline. If they can do that for the new customer, they should be able to rebook the existing customers the same way. These flights are a month away. I have confidence that Costa is planning to do the right thing -- and hopefully this entire thread is moot by seeing the unions agree to the CAI terms and the new Alitalia flies off into the sunset (full of happy Costa cruisers!)

Z U

[Globaliser]

If Alitalia were to fold, and a customer were to approach Costa for a booking on the same ship as I, Costa would be booking that customer on another airline. If they can do that for the new customer, they should be able to rebook the existing customers the same way.

There is a big difference.

 

You have (presumably) been ticketed, which means that Costa has handed over the money to Alitalia.

 

In contrast, if Costa were to book for a new customer now, Costa would not yet have handed over money to any airline, and so there would be no difficulty.

 

So if Costa were to rebook you, someone is going to have to stump up the second air fare. Will it be you, or should it be Costa that insures you against the failure of the airline? Costa's arrangement with you is probably something along the lines of RCI's arrangement, which greatam has previously dug up:-

All arrangements made for or by Passenger for transportation (other than on the Vessel or on any Transport owned or operated by RCT in connection with a RCT Land Tour) before, during or after the Cruise or CruiseTour of any kind whatsoever, as well as air arrangements, shore excursions, tours, hotels, restaurants, attractions and other similar activities or services, including all related conveyances, products or facilities, are made solely for Passenger’s convenience and are at Passenger’s risk. The providers, owners and operators of such services, conveyances, products and facilities are independent contractors and are not acting as agents or representatives of Carrier. Even though Carrier may collect a fee for, or otherwise profit from, making such arrangements and offers for sale shore excursions, tours, hotels, restaurants, attractions, elements of the RCT Land Tour packages that are provided by independent contractors and other similar activities or services taking place off the Vessel for a profit, it does not undertake to supervise or control such independent contractors or their employees, nor maintain their conveyances or facilities, and makes no representation, whether express or implied, regarding their suitability or safety.

Costa may nevertheless do the right thing. But it would be dubious whether it's because they have any obligation to do so.