Despite deadline after deadline being missed the Italian Government has cajoled, twisted arms and I suspected pleaded with the CAI Investors Group, the Unions and Foreign Airlines.
The result so far is an agreement with CAI Investor Group and the Unions, however it is now apparent that a minority stake of around 20%-25% by either Lufthansa, or Air France-KLM is required to make the rescue viable, at least in the short term.
So what is the Situation at the time of writing:
Whilst there has been a lot of tweaking on the subject of pay cuts and other terms and conditions, the major change has been the decision to bring in Foreign Investment, up to a quarter of the total Shareholding in the restructured Airline.
Back in July I wrote an article Alitalia - How long before the life support is switched off? in which I noted that the change of Government, which forced Air France-KLM to abandon its Alitalia takeover, was a lucky escape for the French-Dutch Airline. So does a minority stake make sense, for either Lufthansa, or Air France-KLM?
Well, I have considerable doubts that the Unions will not start 'flexing their muscles' once the restructured Alitalia starts operating and that the new Airline will once again become commercially unviable (see my Article on the 13th September: Alitalia - Have the Unions Killed the only hope?) But there are on the face of it sound reasons why both Lufthansa and Air France-KLM want to be part of the new Alitalia .
Lufthansa (which it appears is the favoured foreign investor) would bolster its already large presence in the Italian Market, plus the advantages of Timetable Integration, which it itself would provide tangible benefits .
As for Air France-KLM, it has watched with some dismay as Lufthansa has built its presence in the Italian Market and see a need to counterbalance this by using a stake in Alitalia. Having negated the Lufthansa's current advantages, the other gains would primarily Timetable integration, which has commercial/financial advantages. However for political reasons Air France-KLM is seriously disadvantaged as a bidder for a minority stake.
Both Lufthansa and Air France-KLM are both in 'Empire Building Mode' and in some cases are competing for stakes, or takeover of several Airlines. So far Lufthansa seems to have the upper hand in those areas where the interests of both overlap.
Meanwhile, sitting on the sidelines is British Airways, which is heavily involved in its ongoing talks to merge with Iberia. It has stated that it is not in the running to buy a holding in the new Alitalia, but has expressed a strong interest in more traditional commercial tie-in. How this could be achieved if either of its major European Rivals has a large minority stake is difficult to see.
Although it appears this is the start of the final act of this tragi-comic Opera, when Italian Politics is involved who knows!
Other Posts on Alitalia in this blog:
13th January 2009:
Alitalia Reborn - But will it Survive?
13th September 2008:
Alitalia - Have the Unions Killed the only hope?
29th August 2008:
Alitalia Files for Bankruptcy Protection
29th July 2008:
Alitalia - How long before the life support is switched off?
The result so far is an agreement with CAI Investor Group and the Unions, however it is now apparent that a minority stake of around 20%-25% by either Lufthansa, or Air France-KLM is required to make the rescue viable, at least in the short term.
So what is the Situation at the time of writing:
- A the non-core assets of Ground Handling, Heavy Maintenance, etc will be sold, or liquidated. I see this as the next major battle between the Italian Government and the Unions.
- More than 3.000 Redundancies in the Airline (probably 3,200). With those being made redundant being reployed into State owned industries, or direct Government Employment.
- 1bn Euro Investment by CAI Investor Group to purchase the 49.9% Italian Government Shareholding.
- Air One to be 'folded into' the new Alitalia. At a personal level I am saddened by this as the Staff and Management of Air One have worked so hard a building a safe, efficient and effective Commercial Airline.
- One question that doen't seem to have been answered, is how Alitalia continues to operate? The bankruptcy administrator (appointed by the Italian Government) has several times stated deadlines to start liquidation and has said that the end of September was a final cutoff date (See the related article on the 29th August: Alitalia Files for Bankruptcy Protection)
Whilst there has been a lot of tweaking on the subject of pay cuts and other terms and conditions, the major change has been the decision to bring in Foreign Investment, up to a quarter of the total Shareholding in the restructured Airline.
Back in July I wrote an article Alitalia - How long before the life support is switched off? in which I noted that the change of Government, which forced Air France-KLM to abandon its Alitalia takeover, was a lucky escape for the French-Dutch Airline. So does a minority stake make sense, for either Lufthansa, or Air France-KLM?
Well, I have considerable doubts that the Unions will not start 'flexing their muscles' once the restructured Alitalia starts operating and that the new Airline will once again become commercially unviable (see my Article on the 13th September: Alitalia - Have the Unions Killed the only hope?) But there are on the face of it sound reasons why both Lufthansa and Air France-KLM want to be part of the new Alitalia .
Lufthansa (which it appears is the favoured foreign investor) would bolster its already large presence in the Italian Market, plus the advantages of Timetable Integration, which it itself would provide tangible benefits .
As for Air France-KLM, it has watched with some dismay as Lufthansa has built its presence in the Italian Market and see a need to counterbalance this by using a stake in Alitalia. Having negated the Lufthansa's current advantages, the other gains would primarily Timetable integration, which has commercial/financial advantages. However for political reasons Air France-KLM is seriously disadvantaged as a bidder for a minority stake.
Both Lufthansa and Air France-KLM are both in 'Empire Building Mode' and in some cases are competing for stakes, or takeover of several Airlines. So far Lufthansa seems to have the upper hand in those areas where the interests of both overlap.
Meanwhile, sitting on the sidelines is British Airways, which is heavily involved in its ongoing talks to merge with Iberia. It has stated that it is not in the running to buy a holding in the new Alitalia, but has expressed a strong interest in more traditional commercial tie-in. How this could be achieved if either of its major European Rivals has a large minority stake is difficult to see.
Although it appears this is the start of the final act of this tragi-comic Opera, when Italian Politics is involved who knows!
Other Posts on Alitalia in this blog:
13th January 2009:
Alitalia Reborn - But will it Survive?
13th September 2008:
Alitalia - Have the Unions Killed the only hope?
29th August 2008:
Alitalia Files for Bankruptcy Protection
29th July 2008:
Alitalia - How long before the life support is switched off?
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