Kevin O'Toole and Allan Winn/LONDON
ALITALIA HAS admitted that it will fail to reach the promised break-even point this year, largely because of the industrial action from the pilots' union which has cost the airline L80 billion ($49 million) in cancelled flights.
The Italian carrier has also been hit by widespread speculation in the press that Alitalia managing director Roberto Schisano has been asked to resign by the board - a move he is reported to have declined. Alitalia was unable to comment on the story as Flight International went to press.
Schisano has been the main architect of Alitalia's restructuring, and in spite of the setback over break-even, has made good progress in revitalising the carrier, despite the bruising battle with employees over cost-cutting.
The airline is confident that operations will be back in the black in 1996. Hans Udo Wenzel, Alitalia's senior vice-president for passenger sales, says that relations with the pilots are "now on the mend", and that an end to the long-running dispute could be close.
An agreement on new working practices, including crewing for the leased Boeing 767s and the 15 Fokker 70/100s on order, was signed in July, leaving pay as the major negotiating point.
Alitalia's next immediate goal is for a recapitalisation to help repair the group's debt-burdened balance sheet. The group requires upwards of L1,500 billion in fresh funds, although part of the capital will come through asset sales, says Wenzel. The sale of a controlling stake in Aeroporti di Roma will provide around L400 billion, with further cash from the sale of the headquarters building in Rome.
The aim is to attract private investors, as well as its state-holding company, IRI, to take part in the recapitalisation, so avoiding a state-aid ruling from the EC.
Although the industrial action has slowed Alitatia's passenger traffic growth to only 3% so far this year, it plans to bounce back in 1996 with a 13% increase in capacity, backed by an ambitious 36% rise in productivity.
It has been good news generally from southern Europe's struggling state-owned flag carriers. Greek carrier Olympic Airways has reported encouraging progress on its restructuring efforts.
Olympic expects to end the year showing a modest net profit of Dr4.3 billion ($19 million), the group's first since 1978, says chairman Prof Rigas Doganis.
The improvement follows the restructuring programme launched in the middle of 1994, backed by a massive debt write-off by the Greek Government, totalling Dr491 billion.
The impact of the reduced financing burden showed in the group's performance over the first half of the year. Pre-tax losses of Dr5.3 billion in the traditionally weak first half were down from Dr16.7 billion a year ago.
Doganis says that cost-cutting efforts are making a contribution, including annual savings of Dr5 billion from the pay freeze imposed at the start of 1994. He adds that more than 1,000 jobs will have gone by the end of this year, on the way to a staff reduction of 1,900 when restructuring is complete in 1998.
For the longer term, the airline also plans to halve the number of types in its jet fleet, from six to three, although under the terms of the European Commission's state-aid approval, Olympic will not be permitted to renew its long-haul aircraft until after 1998.
Olympic is drawing up a plan to renew its short-haul fleet, however, and discussions with manufacturers are due to begin by the end of the year says Doganis.
Source: Flight International
