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Posts Tagged ‘alitalia’

Alitalia, the feline airline with nine lives, may yet live, according to AP and Financial Times stories. (The FT lede says that the lack of a “Plan B” may keep Alitalia flying. In the real world, the lack of a Plan B means liquidation.) No one wants to buy this basket case of an airline, but Italian prime minister Silvio Berlusconi made keeping Alitalia Italian (and operating) a central item on his agenda. So, since all else seems to have failed, why doesn’t Berlusconi just buy the government stake in Alitalia himself? He’s Italy’s richest man, with a net worth of $12 billion — enough hardly to notice an investment of $600 million, which is what the last consortium was bidding.

Furthermore, aviation is an industry that attracts eccentric businessmen: Richard Branson, Donald Trump, Howard Hughes. Why not Silvio? Of course, it might be that he’s a shrewd enough businessman to recognize that Alitalia as currently constituted is a gaping money pit. Like most politicians, he’s happy to invest other people’s money in unprofitable but “patriotic” ventures. (See also: Henry Paulson, Barney Frank.)

All the same, I hereby call on Silvio Berlusconi either to pony up the cash for Alitalia or let this airline die a dignified death.

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. . . but they apparently have advocates in high places.

(H/T: Things with Wings)

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With Silvio Berlusconi’s expected victory in this week’s elections, Air France-KLM is “poised to walk away from a deal” to acquire failing and flailing state airline Alitalia, reports the Telegraph. Berlusconi has expressed his hostility to the proposed deal, already on the rocks due to union opposition, calling it “unacceptable and, indeed, offensive for our country.” His protectionist tack includes support for adequate Italian bids for the airline, which failed to materialize over the past two years of soliciting bids. Meanwhile, Alitalia is running out of cash and may lose its license. Stay tuned…

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My article about the Alitalia privatization debacle — and how it’s being complicated by next week’s elections in Italy — is now up at Forbes.com.

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Wise words from The Cranky Flier regarding government impulses to bail out failing airlines. Let the market work; it does a great job of responding to demand and generating better service than a nearsighted embrace of the status quo does.

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