Anyone Want to Buy a Debt-Ridden Italian Airline?
It’s a busy day at the GoNOMAD Cafe, a traveler’s haunt where people come to check their email, drink lattes and eat breakfast sandwiches. It was here that I got a chance to catch up with the travails of Italy’s flagship airline….which was recently described by their chairman as ‘comatose.’ The Wall Street Journal had a story by Gabriel Kahn about the ongoing efforts to sell Alitalia before it goes belly-up.
It seems nobody wants to buy this debt-ridden, strike-prone state carrier. Lufthansa bowed out last year, and at one point Aeroflot, Russia’s horrible airline had an interest but was rebuffed. Now the world’s largest airline by revenue, Air France KLM, is taking a look. But the pride of Milan isn’t exactly a winner these days. In fact the bids that the company is considering weigh most heavily on how much a suitor would invest in Alitalia, not how high the bid is. Another possible buyer is tiny Air One, which flies about a quarter as many routes as Alitalia in Italy. The small advantage here is that an Air One purchase would keep the owners in Italy, which is a big deal to Italian politicians.
I have flown Alitalia several times to Italy and have never been impressed. The flight attendants wear silly, unflattering uniforms in the Italian colors of green, red and white, and don’t seem to care much about passenger comfort. The food, compared with the offerings at the destination, was never very good .The wine was junk and you couldn’t lie down in business class.
The problem with Alitalia, like many European economies, is that the workers rule the roost. “Job security guaranteed by the government ownership has sapped the carrier’s competitive edge,” said the story. Air France would likely cut down operations in Milan, and concentrate in Rome, and the smaller carrier would maintain both hubs. Sounds like a bettor would stake a claim on the David instead of Goliath winning this bid.