Industrial action hits Alitalia

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Early 2006 witnessed strikes and other industrial action at Alitalia, the Italian national airline. The main issue is that trade unions claim that management has unilaterally changed plans to restructure and relaunch the airline set out in an agreement signed in September 2004. Management responds that it is only speeding up the agreed reforms. The dispute has also involved the Italian government, which is supposed to guarantee that the 2004 agreement is implemented.

During early 2006, Alitalia, the Italian national airline, has been hit by industrial action, with major disruptions for passengers on domestic flights or in transit through Italy. Trade unions have held several one-day strikes, organised assemblies and staged protests. Around 130 flights were cancelled during a strike held on 19 January, and others were cancelled in the days that followed. When a further 24-hour strike was announced for 23 January, the Guarantee Authority (Commissione di Garanzia) which regulates strikes in essential public services (under the terms of laws no. 194/1990 and no. 83/2000) (IT0004266F) accused the unions of breaching the legal provision that 10 days must elapse between one strike and the next. The president of the Guarantee Authority, Antonio Martini, voiced his concerns over the situation and the difficulties caused for Alitalia and air travellers, and urged 'postponement of strike action with the resumption of talks among company, unions and the government'. However, although the strike was called off, 23 January still saw severe disruptions, with 225 flights out of a total of 250 cancelled. The same happened on the following day.

Besides the strikes, there have been other, more 'symbolic', forms of protest action, such as an occupation of Alitalia’s executive offices and a 20-minute blockade of the Fiumicino airport in Rome. Following the cancellation of hundreds of flights, the Public Prosecutor’s Office in Civitavecchia has decided to investigate whether the strike action by the Alitalia unions has been in breach of the law.

The strikes held by the Italian Transport Worker’s Union (Federazione Italiana Lavoratori dei trasporti, Filt-Cgil), the Italian Transport Workers’ Federation (Federazione Italiana Trasporti, Fit-Cisl), the General Labour Union (Unione Generale del Lavoro, Ugl), the Pilots’ Union (Unione Piloti, Up) and the Unitary Transport Workers’ Union (Sindacato Unitario Lavoratori dei Trasporti, Sult) have mainly involved maintenance and handling workers, and administrative staff transferred to Az Servizi after Alitalia’s most recent restructuring.

Background

The protests have centred on implementation of an agreement signed in September 2004 (IT0410104F) and guaranteed by the government. The September 2004 agreement was reached after long negotiations. It reorganised Alitalia’s corporate structure and laid down a two-phase plan to relaunch the company. Especially controversial has been the division of Alitalia into Az Fly, which manages air transport, and Az Servizi, which manages maintenance and administration services, both of which are being privatised, albeit at different speeds.

The reasons for the protests lie in developments at Alitalia in the past few years. A former state monopoly, Alitalia must now operate in what is a highly competitive market, especially since the advent of low-cost airlines. The company has undergone repeated restructurings centred on outsourcing and staff cutbacks - the September 2004 agreement reduced planned job losses among ground staff from 3550 to 2,490 - but they have proved ineffective (IT0203101N, IT0205202F, IT0404304F and IT0410104F). In the past 10 years, Alitalia has been afflicted by recurrent economic crises which it has been able to overcome only thanks to state aid. For some time, therefore, relationships between the company and the unions have been exceptionally difficult (IT0509303F).

The situation has been exacerbated by the failure of Alitalia’s plan to take over the Volare low-cost airline. In early February 2006, the Rome courts instructed Alitalia to withdraw its bid for the purchase of Volare, which went bankrupt in 2004. Alitalia had made a successful offer of EUR 38 million, but AirOne, one of the competing Italian airlines, lodged an appeal with the Rome court, and subsequently with the European Commission and the anti-trust authorities, on the ground that Alitalia was using state aid (50% of Alitalia’s recent recapitalisation of EUR 1 billion was financed by the state) for investment purposes.

Finally, according to business experts, one of the main causes of Alitalia’s problems is uncertainty as to where its principal hub should be: they argue that the fact that it has two of them, Rome Fiumicino and Milan Malpensa, does not help in the definition of efficacious strategic plans.

Positions of negotiating parties

In early February, the unions published a 35-page dossier that sets out data on Alitalia’s economic and managerial performance over the past 10 years and expresses serious worries. According to the unions, 'there is a risk that the economic resources made available by the recent injection of capital, added to reduced labour costs, will once again be dissipated'. Claudio Genovesi of Fit-Cisl, as well as many others, has argued that a genuine business plan and strategic alliances are urgently needed; otherwise Alitalia may go into irreversible decline.

Not only the trade unions and Alitalia management are involved in the complex dispute. The Minister for Industry, Pietro Lunardi, and the Minister for Welfare, Roberto Maroni, have also intervened, declaring their willingness to consider and evaluate the unions' dossier. Although, as noted above, the government is guarantor of the 2004 agreement, it is unclear which ministry should supervise negotiations on the Alitalia situation. The unions maintain that the Ministry of Industry is more suitable than the Ministry of Welfare, given that it is industrial rather than labour policies which Alitalia must define.

Prime Minister Silvio Berlusconi has blamed the unions for the failure to implement a business plan drawn up by Giancarlo Cimoli, president and chief executive of Alitalia. During the strikes, Mr Berlusconi announced that '18,000 workers' (referring to the total number of actual Alitalia employees, not the 'surplus' workers currently subject to negotiation) 'may lose their privileges'. For some commentators, this declaration recalled the decision in August 1981 by Ronald Reagan, then President of the USA, to dismiss about 11,000 striking air-traffic controllers.

During the January strikes, conflicting positions were taken up by the unions, illustrating their severe fragmentation. For example, the Federation of Pilots’ Associations (Federazione Associazione Naviganti, Fan) - which represents the National Association of Commercial Aviation Pilots (Associazione Nazionale Piloti Aviazione Commerciale, Anpac), the National Association of Passenger Transport (Associazione Nazionale Autotrasporto Viaggiatori, Anav) and the Associated Italian Flight Assistants (Assistenti di Volo Italiani Associati, Avia) - contested the strikes called by Filt, Fit, Uilt, Ugl and Up. An important issue behind the dispute is Alitalia’s public/private ownership structure and the consequent differences in employment conditions, as highlighted by Anpac’s statement that: 'It is paradoxical that the pickets at the hangar doors consisted of workers who will continue to be state employees, incomprehensibly supported by the pilots, who are about to be privatised.'

Mr Cimoli, the Alitalia president and chief executive, has placed the blame entirely on the Alitalia workforce: 'If any trade unionist calls me a swindler, I shall sue them, and also if they say that we’ve lost EUR 270 million … I’m trying to protect myself, because if these stories appear in the newspapers they damage us.' Mr Cimoli has instead stressed Alitalia’s good results in 2005, a year which saw a significant decrease in losses and which in several other respects seems to have presaged an encouraging revival in Alitalia’s business operations (in terms of the number of passengers, earnings, transport capacity and passenger filling coefficient). However, according to the unions, 'although the figures indicate that some business growth has taken place, it is less than envisaged by the restructuring plans'.

Commentary

It seems that strategies based on outsourcing and staff cutbacks have exhausted their potential at Alitalia, as well as being very costly. On the other hand, the Alitalia dispute is probably being influenced by the forthcoming parliamentary elections in April 2006. Declarations by the social partners and all the political parties express a strong desire to 'rescue' Alitalia, although quite how this should be done is not made clear. Numerous suggestions have been put forward on relaunching the airline, but each differs in popularity, and there is a risk that the dispute will be exploited during the electoral campaign. The strategy adopted will be decisive, for example, in either converting Alitalia into a low-cost airline or in re-establishing it as a prestigious flagship airline. An alternative efficacious solution might be a strategic alliance with another airline company.

Another meeting between the company, unions and the government was to be scheduled before the end of February 2006 in order to decide which action are to be undertaken and whether it is possible to ensure that Italy continues to have a flagship air transport company, which is vital for a country whose tourism sector is so important. (Manuela Galetto, Ires Lombardia)