Unrest rumbles on at Alitalia

| Mon, 01/23/2006 - 05:48

The state of unrest at Alitalia deteriorated on Friday, the day after a 24-hour strike forced the Italian airline to cancel over 100 flights. Unions announced that they will hold another one-day strike on Monday and will continue throughout the weekend with the go-slows and work-to-rules which were disrupting services Friday.

The unions are protesting against the management's handling of a restructuring plan that aims to get the troubled carrier back into the black. For some time Alitalia has been struggling to adapt to a deregulated European civil aviation market and fend off
competition from low-cost carriers like Ireland's Ryanair and Britain's Eastjet.

The unions accuse management of taking a "short-sighted" approach to saving the company, which focuses on cutting routes and staff without looking at ways to win back business.

The unions are also unhappy that the government, the airline's biggest shareholder, has not intervened. In a statement, they said their actions were justified by the "provocative attitude of the company and the guilty silence of the government."

Labour Minister Roberto Maroni responded that the government had tried to mediate between management and unions last year to no effect and "had done all that could be done". Industry experts say European rules prevent the government from doing more and argue that the union's actions are making the airline's precarious position even worse.

"The unions are asking for the government to intervene, but there are limits imposed by the EU - the government cannot pump in any money," Maroni said.

"Alitalia either manages to survive in the market or it does not. There is no chance of a public intervention." As well as the cuts, Alitalia's restructuring plan also involves eventually splitting the airline into two units, one dealing with flight operations and the other with ground services.

Some of Alitalia's rivals, like Ryanair and British Airways, think the Italian government has done more than it should to help the airline. Italy had to work hard last year to obtain European Commission approval for its support of Alitalia's bail-out plan which included a recapitalization backed with government loans. The recapitalization took the state's stake in the airline to 49.9%.

Rival carriers had lobbied against the plan, arguing it broke EU competition laws that forbid state aid to national champions.

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