Tuesday, January 16, 2007

Take our airlines....Please

Europe's pet industries are finally going to have to straighten up and fly right:

For years, European Union regulators have been trying to persuade governments across Europe to wean their unprofitable state-owned companies from the subsidies that keep them alive.

This month, Rome is finally doing just that, cutting the cord of Alitalia SpA after years of keeping the albatross of European airlines alive. The Italian government has set Jan. 29 as the deadline to find private investors to take money-losing Alitalia off its hands.

Rome isn't the only government to run afoul of Brussels for keeping big employers on life support. Greece confronts a similar quandary as it tries to salvage debt-laden state carrier Olympic Airlines. Brussels insists that Olympic hand back hundreds of millions of euros in state subsidies, hampering the Greek government's plans to privatize the airline.

In France, a multibillion-euro package in 2003 to rescue conglomerate Alstom SA from bankruptcy and save 26,000 jobs went through only after nine months of wrangling with Brussels. Soon afterward the EU issued rules to further restrict state-sponsored bailouts.

Brussels also is fighting Germany in court in an effort to repeal a law that protects car maker Volkswagen AG from a takeover and possible job cuts. The Italian government, however, has bowed to EU pressure and concluded that selling Alitalia is the only way to save the airline from political meddling that has weighed it down in the past.

But, it ain't going to be easy:

Alitalia is a tough sell. Whoever takes over the company will have to negotiate with no fewer than 10 unions, whose strength and tight relations with political parties in the government have frequently given them the upper hand over management. ....

Rome has insulated the carrier from competition and allowed layers of expensive privileges to accumulate. Alitalia female flight attendants have the right to two days of paid "menstrual leave" a month, according to the company. Alitalia's Boeing 767s are among the only planes in the industry that still have space carved out for a bed for tired crew members. The airline last year tried to remove the beds to make more room for passenger seats, but abandoned the plan because of union resistance. Unions went on strike for a total of 176 hours last year, bringing the airline to its knees during some of the busiest travel periods.

Alitalia also operates an aging and inefficient fleet -- often flying planes that burn more fuel and carry fewer passengers than newer models -- making it difficult to make money even when planes are full.

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