Alitalia crisis deepens as chairman quits

Black Friday in the boardroom: Shake-up at the retailer, darkening clouds over Italian airline, and a surprising departure at the conglomerate

RUSSELL HOTTEN

The crisis at Italy's flagship airline, Alitalia, deepened last night after the chairman angrily resigned, warning that the company's survival was at risk after failure to tackle strikes and debts.

The departure of Renato Riverso, which follows the dismissal last year of the managing director, suggests that the tough cost-cutting strategy at the company is likely to be put on hold.

Europe's private airlines, such as British Airways, have been campaigning against continued state subsidies for their rivals and will be watching whether it means more aid is pumped in.

Reforming Alitalia was seen as a test case for Italy's bloated public sector, which has long been the subject of political interference and concessions to the powerful unions.

Mr Riverso and the former managing director, Roberto Schisano, joined Alitalia in 1994 - the former from IBM and the latter from Texas Instruments.

In a letter to an Italian financial newspaper, Mr Riverso said he had lost the confidence of the airline's owner - IRI, the state industrial holding giant. He called IRI "inert, mute and passive" in the face of Alitalia's problems. IRI's attitude showed the "tradition of compromise which our country seems unable to renounce," Mr Riverso said.

"I have resigned as president of Alitalia to put an end to an unsustainable and paradoxical situation that was created in the relationship between me and the majority shareholder Istituto per la Ricostruzione Industriale Spa," he said.

Last year ex-managing director Roberto Schisano was dismissed in a row over pay negotiations with the company's unions. Mr Riverso's departure seems to have been triggered by the appointment two weeks ago of a new managing director, Domenico Cempella, who has said he wants to avoid "traumatic" job cuts at the airline. Mr Riverso painted a bleak picture of Alitalia's problems in his letter. "Alitalia is a firm which produces at high cost while its product is not recognised to be of high quality. Services on offer are not competitive while the world market is becoming ever more demanding and aggressive," he said.

Alitalia needed to make annual savings of L600bn a year (pounds 256m) in order to restore its financial health. "There is no way round this problem," Mr Riverso said.

The company's problems have been exacerbated by a string of strikes called by unions to protest at tough restructuring plans unveiled by Mr Schisano last year.

Trade unions have threatened another eight-hour strike for March 12, with management and workers due to meet early next week to try to break the deadlock. However Mr Riverso said the airline's management had not been backed up by IRI in its dealings with the unions.