Reviving Alitalia: Italy's Loss Making Airline

In fact, industry analysts cynically expanded the acronym Alitalia to mean Always Late in Takeoff, Always Late in Arrival. By the airline industry's standards for the 1990s, Alitalia's fleet was outdated, contributing to rising costs. The entire fleet was due for a complete overhaul. Alitalia also earned a bad reputation for its un-cooperative work force that resorted to frequent strikes, halting the company's operations. Reportedly, the labour unions had a strong government backing, enabling them to successfully oppose any move by the management to privatise the company and reduce the workforce. Repeated government intervention in the company's matters, especially those concerning labour and leadership, deprived the management of functional autonomy to run the company on commercial lines...

They earned the sobriquet 'aquile selvaggier' (wild eagles). Alitalia's fleet, largely comprising MD-11 aircraft, was inferior in quality compared its competitors, who had aircraft made by Airbus and Boeing. Alitalia's operating costs were 25% to 30% higher compared to its European competitors and 30% to 35% higher than American airlines. The new management team embarked on a massive restructuring exercise, involving work force reduction of 20% over three years (about 4000 employees), total cost control across the company, further negotiation of agreements with trade unions and a possible merger between Alitalia and ATI. Another significant decision was to enter into a code sharing agreement with Continental Airlines...