Everything you are going to read here is true, despite sounding like a joke.
On January 13 2009 finally the new Alitalia owned by the recently formed Compagnia Aerea Italiana (CAI) will take off. The “good flesh” of the company was bought by CAI on December 12 last, after a never-ending-story. It also merged with AirOne, a low-cost air company owned by Carlo Toto (who a couple of weeks ago was involved in his last corruption scandal that forced the mayor of Pescara to resign), one of the financial raiders and serial-bribers who gave birth to CAI, the very same people who Berlusconi called the “Bold Knights of Italian business”. Now the “bad company”, the part of Alitalia with debts, will be liquidated by the national government. Rumours around say in total the Italian State will use around 3 billions Euros taken by taxation for paying back Alitalia’s creditors.
Genesis of a disaster
But let’s go back for a sec to the history of the ludicrous agony of this (ex) public owned company. The Italian government and some other organizations so far have invested €4.9 billions in Alitalia since 1998, all public money that disappeared in the voracious throat of this delirious company owned by the Italian ministry of economy and its criminal administrators, obviously chosen by politicians.
Probably the worst of them was Giancarlo Cimoli (chemical engineer, with no managerial background whatsoever, therefore ideal public manager in Italy), chosen by Berlusconi as president of Alitalia in 2004, after having spent around 10 years in Ferrovie dello Stato (FS, national railway) where he almost leaded the monopolist company to bankruptcy (he got €6.7 M prize for his achievements). In 2004 the government led by Berlusconi gave a €400mn “bridge” loan to Alitalia. Cimoli used that public money for buying the bankrupt Volare Group (Volareweb, Air Europe) , hence dilapidating in another agonizing flying company the public money given by the government for cancelling Alitalia’s debt… This is what I call strategy and vision! And what a synergy: combining the incompetence of two failing companies!
In 2005 the capital of Alitalia was increased by €1.6 billion, including an over €500M bond float issued with the promise of a return to profit in 2006, but unfortunately the year ended with a loss of €626 million… surprise, surprise… Of course Italian citizens with their taxes were paying for this, while schools and hospitals were closing down as well as police cars were parked in garages without petrol for lack of money… but that is another story.
At the end of his presidency in 2007 Cimoli decided he deserved € 3M prize for having completely destroyed Alitalia. And of course he got the money.
How to get rid of an economical cancer?
Several attempts to take over or merge Alitalia were made between 2005 and 2009, especially because Italian government from 2006 theoretically could no longer offer support to the failing airline, because it was forbidden by the European Union.
In March 2008 Prodi found an agreement for selling Alitalia (the whole company, including debts) to AirFrance for around one billion Euros, but the strange coalition of trade-unions and Berlusconi doomed it. In the meanwhile Carlo Toto (who had offered 1 cent per stock versus the 35 of AirFrance) had appealed to tribunal against the bid that assigned to Air France the priority for buying Alitalia. The unions said in the AirFrance plan there were too many redundancies (around 2500), Berluskaiser used the question for electoral and populist purposes saying Alitalia had to remain an Italian company. He vaguely talked about an Italian group of proud national businessmen he was aware of who were willing to buy Alitalia. In reality he wanted to tackle Prodi’s historical success in getting rid of Alitalia, which would have meant a success for his opposing coalition, while Lega Nord, one of Berlusconi’s most trustworthy ally, strongly pushed for making Malpensa the core of Alitalia. The risk for Nordic politicians was to lose their local electoral support because AirFrance plan was of definitely shifting the core of Alitalia’s business from the Malpensa Airport (close to Varese) to the Fiumicino hub (the main Italian and Roman airport). As most people know Malpensa has been one of the most expensive failure in Italian strategy: a huge airport planned with the pretence of becoming THE Italian hub, built in a foggy valley in the middle of nothing, where the weather is so miserable that whenever it snows most flights are cancelled. The airport was possibly built just for serving Italian speaking Switzerland (Canton Ticino), given the fact it is far away from both Milan and Turin.
In March 2008 – against European laws – through a bipartisan agreement it was decided to give a bridging loan of €300M to Alitalia, just for surviving a few months longer for allowing Berlusconi to find some Italian buyer.
So Prodi did not manage to sell Alitalia, but just before the political elections in April last, around 1000 temporary employees got a permanent contract. With a company that only a couple of days before was going to make around 2500 redundancies? Yes, that is the power of quid pro quo in here, it is the typical “I give you a job, you vote for me”… But it was the Cayman who won the elections again…
As soon as he became prime minister the histrionic Berlusconi said that AirFrance would be a good buyer for Alitalia (!??!?!?). Nonetheless, he valorously worked for putting together some well known speculators around a succulent meal: he convinced the experienced businessman Colaninno – father of the responsible of economy for the PD (Democratic Party), at the opposition in Parlament – on the succulent opportunity, the tasty flesh to bleed white, offering to his friends of raiders and financial vampires the possibility of buying for a few Euros a sane flight company cleaned from the debts and with no competency on the most revenueable routs, where tickets’ costs will increase dramatically.
The financial raiders
In August 2008 Alitalia went bankrupt. The Italian government and the bankruptcy administrator agreed to the CAI take over offer on 19th November 2008. The profitable asset of Alitalia has been transferred to CAI, while the “bad company”, Alitalia’s less healthy and unprofitable parts – together with much of the current debt it carries – was transferred to another entity that would be authorized to sell assets to reduce the first $1.5 billion in debt, such as land that surrounds Rome’s Fiumicino Airport. All Alitalia’s debts will be liquidated by the State that will pay off all creditors, including the leaving indemnity for the 5000 employees (twice as much as foreseen with previous AirFrance restructuring plan), not mentioning the subsequent expenses for the dole.
The Italian “businessmen” (together with a couple of foreign bankers as well) finalized a package that would maintain Italian ownership of the airline, but flying a greatly-reduced network, and partnering with a major European airline.
Compagnia Aerea Italiana (CAI) bought Alitalia for €1.052 billion ($1.33 billion) paying €427 million in cash and taking on €625 million in Alitalia debts. The plan merged Alitalia’s healthier business aspects with Air One, an Italian airline that is smaller and privately owned. The combined company resulting from Alitalia and Air One would receive money from several sources, including five Italian investors, two private equity companies, two international banks and two Italian banks. The injection of funds and restructuring plan would make it possible for Italian Prime Minister Berlusconi to assert that he has kept his campaign promise of keeping Alitalia Italian (which, as said, is not completely true).
CAI consists of several Italian financial raiders and speculators, and a couple of foreign banks who took the place of Lehman Brothers, the bankrupted bank which was supposed to be the warranter of the operation. Most “entrepreneurs” in CAI have been convicted, investigated, were on trial. In their hands, gold becomes shit and shit becomes capital gains. Their only goal is to exploit the rich route of Fiumicino-Linate where they have the monopole – for which they obtained a 3-year moratorium from the National Antitrust Authority – and then sell the company to AirFrance. Air France at the beginning will only be the foreign partner of Alitalia, entering Alitalia’s capital with around €310M, but acquiring just 25% of the new company, being the rest of the money as an option for buying the whole company at a later stage. Almost any expert (?) believes that after 3 years (at the end of the moratorium) Air France will buy the majority of Alitalia’s stocks, and will practically be the owner. Hence, Italian people are paying taxes for allowing some Italian financial raiders and a French company to speculate… Nice!
None of CAI members had experience in the aviation sector, with the exception of Carlo Toto, as said owner of AirOne, a low cost Italian company whose fleet was bought through the “Chinese boxes system”, thanks to loans obtained by some Irish companies (owned by Carlo Toto) from international banks, each of them bought a plane on leasing. Therefore AirOne fleet practically belongs to Irish banks, but AirOne debts (€490M) are converging into the new Alitalia.
Everything for the joy of pseudo-nationalists like Berlusconi, while, for the joy of trade unions, redundancies made by CAI are twice as much as the ones agreed by Prodi and AirFrance in the first instance. And this time – while pilots and flight assistants Unions fought hardly – the national Trade Unions accepted it almost immediately (?!?!?!). I assume they had to play some sort of a game to show they were trying to do their best. In reality they just represent themselves. They have defended some privileges (their privileges) and betrayed the employees. Honestly it is hard to believe they trusted the electoral promises of Tar Head (another nickname for Berlusconi) and the notorious Italian consortium. Therefore the question to arise is: what did they get in exchange for the failure of the Air France negotiation? Well, I do not that, but I doubt it was just a question of visibility…
As soon as the old Alitalia disappeared, CAI did not respect the agreement signed just a couple of months before with the trade unions, generating a lot of anger among employees, who were all fired and most of them later offered a new job within the new company at worst conditions. But this time trade unions did not interfere in the dispute… funny, is it not?
Any clearer why Alitalia employees are more on strike than ever? How could you expect them to work decently and offer you a good service?
Anyway, Alitalia represents a paradigm, a metaphor for Italy. The bankruptcy of Alitalia is a symptom and a prelude of country’s steadying collapse. Political parties and Trade Unions know this, but just try to keep on maximizing their own profit.
In the last lines I think I gave you enough ethical reasons for boycotting Alitalia… If morality is not your cup of tea (say you are in finance, a paedophile, a priest or more probably a combination of them) but you want your flight will have good chances of taking off or landing on time, and you do not feel like paying a ticket twice as much as it was before for the same shit service, well mate, you better avoid Alitalia anyway…