Truths and lies about Alitalia (which goes to Ita)
Alitalia: facts, comments and analysis. The intervention by Paolo Rubino after the article by Giorgia Meloni, president of the Brothers of Italy, on the Messaggero
Among the numerous interventions by Italian political leaders on the Alitalia affair, that of Giorgia Meloni which appeared yesterday in the Messaggero opens a new perspective in the debate on air transport in Italy. Although a certain level of rhetoric is inevitable in political discourse, the intervention has the merit of identifying in an orderly way some key points of the question and of directing political action towards a pragmatic resolution of them. Which are, first of all, the clear definition of the quantitative and industrial dimension of the case of the national carrier.
Meloni quantifies the work area threatened by the definitive cessation of a national activity in the aeronautical sector at one hundred thousand people. The number is round and, for clerics, it could be the subject of quirky disquisitions, but it has the indisputable advantage of leaving the perimeter of the 11,000 employees, more or less, on the carrier's payroll.
This remaining group of Mohicans is mostly the object of opposing demagogies. On the one hand, the unions which, in a position of extreme rearguard, have been defending its consistency for over twenty years, unfortunately with much less success than the defenders of the panda. The extinction of Alitalia employees is proceeding at an average rate of about 700 units per year from 2000 to today. On the other hand, ultraliberals and anti-casts who, in a surprising combination, consider the employees of the company as unproductive slackers, therefore privileged to be extinguished like any coronavirus.
Neither the union, nor the ultraliberals and anti-castles make the effort to observe that the decrease in employment in air transport in Italy is one of the main factors that have allowed the proactive defense of the employment levels of European competitors.
In any case, the number indicated by Meloni should open the mind on the crucial data, that is, on that no less than 40% of the spending budget of an air carrier that purchases from companies that employ large quantities of human labor, in many cases of very high quality value, as in the engineering sectors for maintenance or information technology in the technical avionics or management fields. The leverage effect on the broader economic system is a decisive characteristic of air transport anywhere in the world, in addition to the consideration of the functionality of a carrier for the purposes of developing the tourist, business and cultural attractiveness of a territory, of functionality to national security and to the foreign and commercial policy of a nation.
Underestimating this aspect is a case of severe myopia of the ruling class, unfortunately it has been done for almost thirty years. The second key point of Meloni's intervention is that relating to the aircraft fleet. Always, or at least since the 1990s, in Italy this factor has been looked at exclusively as a cost item in the budget of the airline which is worth approximately 20% of the total expenditure. Forgetting that a cost item in the balance sheet of a company, excluding fixed structural costs, always finds its counterpart in a revenue item of the supplier company. Airplanes are assets as are real estate, stocks and bonds, patents, liquidity.
It is also a highly profitable asset for its owner. The average profitability of airplane owners has never dropped below 20% of turnover in the last twenty years, whereas that of carriers has barely touched 5%. Owning your own aircraft, at least equal to 50% of the fleet used, is essential for the financial and income stability of an airline, as the excellent case of Ryanair clearly demonstrates. And if the company must, for contingent reasons, resort to renting the aircraft asset in excess of 50%, make sure that the marginality between four and five times higher than the owner of the asset with respect to the carrier remains within the boundaries of the broad national economic system would be a good thing. All the more so in the case of Alitalia which is approaching 100% in chartering of the operated fleet.
Meloni's intervention has the undoubted merit of putting this question on the table of the political decision-maker. The third point to attention is related to the capital necessary to seriously develop the industrial project of the national carrier.
Unheard of and surprising the courage of self-criticism by Giorgia Meloni on the painful experiment of “brave captains” conducted between 2009 and 2014 on Alitalia. But why be surprised, private capital seeks direct and short-term profitability. This can happen in air transport only in the positive phases of the economic cycle and only if the company is perfectly positioned to seize the opportunities of the cycle. Public capital is the only one willing to invest for longer-term returns and to get companies back on track following serious crises. This is what has always happened in the past in any economic system, be it liberal, social democratic, authoritarian, sovereign or ideological dictatorial to use the classifications of Yuval Harari in his “21 lessons for the 21st century” of 2018.
Meloni mentions what is happening in Europe with the massive intervention of governments in the financial strengthening of their companies. If there is a regret on this issue, it, once more, derives from the observation that, at least in the field of air transport, we in Italy always seek the legitimacy of one's possible choices in the precedents of others, underestimating that , in the dynamics of the competitive economy, always following the moves of others and never anticipating them will never allow to reap the adequate benefits from one's own risk investments.
This is the typical behavior of the underdog, a term used in the Anglo-Saxon language for companies that limit themselves to imitating the moves of the leader. The underdog, in the expectations of analysts and investors, is destined to always lose and, in fact, when the Anglo-Saxons surprise wins, they define the case as upset, or rather upset of the rules.
Alitalia has been condemned for twenty years to be underdog. This is why he can only return to success by upsetting the rules of the game. This awareness is essential for the ruling class, above all for the political class.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/verita-e-bugie-su-alitalia/ on Thu, 15 Apr 2021 10:26:48 +0000.