Alitalia says Ciao to La Dolce Vita and Bonjour to the French

Zut alors! After seven years of dedicated stalking, Air France-KLM could finally get its hands on Alitalia.

Last Updated: 31 Aug 2010

Air France-KLM has offered to pay £574m for Alitalia, the basket-case Italian carrier. However, there are still a number of difficult hurdles it has to jump before the deal gets final approval. Not only will the Italian government - which holds a 49.9% stake in the airline - have to OK the deal, so too will the troublesome Italian unions. Buona fortuna, we say. Already, union protesters have been out bandying banners proclaiming ‘No Alitaglia’ (no to cutting Alitalia), in protest against Air France-KLM’s proposed restructuring of the airline - which will see at least 1,600 employees get the chop.

According to Raffaele Bonanni from the CISL federation of trade unions: ‘The government has stripped us nude with this Air France deal. This is harmful for the workers, the infrastructure and the general interests of the country. Now we have to try to contain the damage, but the people who have made this mistake will pay the price.’ Sounds like he might take a bit of convincing.

The Italian government, still smarting from the loss of national pride in having to sell its flagship airline to the French and Dutch, could also throw a big spanner in the works. An Italian general election next month could see ex-PM Silvio Berlusconi back in office, and he has already made clear that he wants Alitalia to remain in Italian hands - though the likelihood of that happening is very slim.

Alitalia hasn’t made an operating profit in a decade, and yesterday’s deal saw its shares valued at a measly 10 cents, compared to 95.4 cents just over a year ago. But if Air France-KLM can straighten out Alitalia’s terrible finances, it could capitalise on Italy’s lucrative domestic market – an opportunity Ryanair spotted a while back. The maverick Irish low-cost carrier has aggressively eaten away at Alitalia’s European market share for some time now - although it has been Alitalia’s historic mismanagement and government interference that has really left the airline high and dry.

It’s highly unlikely that Michael O’Leary will lose any sleep over the Alitalia deal, but our guess is that bosses at troubled Greek airline Olympic must be feeling very nervous at developments in Italy...

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