| Italian airline on the verge of bankruptcy The management of the Italian national airline Alitalia has prepared a program to bring it out of the crisis at the cost of mass layoffs and increasing production standards for the remaining staff. The plans are facing opposition from the company's unions. Meanwhile, Alitalia's share price has fallen by almost half over the past five months. The Italian government, which owns 62% of its shares, is concerned about the fate of the company. However, the measures taken by the authorities and management of Alitalia have not yet given the expected result.
This was announced at a meeting of the company's senior management on July 26 by its president, Giancarlo Cimoli. According to him, the volume of passenger traffic on Italian domestic routes fell by 11% in the first five months of this year. With revenues of 4.3 billion euros, the company's losses in the first quarter of 2004 exceeded 300 million euros. Alitalia's debt reached 1.6 billion euros.
To ease the company's financial burden, Mr. Cimoli proposed firing a quarter of its 20,000 employees. Those who remain will have to work harder. In particular, it is proposed to increase the standard annual flight time for pilots to 900 hours. Cimoli's team is developing a plan to minimize losses in 2004 to 770 million euros and reach profitability by 2006.
The measures proposed by the president do not meet with understanding among the company's trade unions. The union called the increase in flying hours “unacceptable for safety reasons.” (Meanwhile, approximately the same standards are already in effect in other large international airlines. For example, in Aeroflot, as the press service of the Russian company told the Vremya Novostei newspaper, the standard for pilots is 800 hours per year on all aircraft except A-320, where it is higher - 900 hours.)
The Italian authorities, for their part, tried to lend a helping hand to the falling carrier. In July, the government of Silvio Berlusconi issued state guarantees to the airline to attract bank loans in the amount of 400 million euros. In addition, the authorities tried to oblige competing airlines from other European countries flying to Italy to sell tickets for their flights no cheaper than Alitalia's fares. However, this measure had to be canceled under pressure from the European Union. But the loans received are not yet enough to save Alitalia. Mikhail KUKUSHKIN |
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