An Aussie Invasion At Alitalia

ALITALIA PASSENGERS NOW might hear "G'day" rather than "Buon giorno" from the flight crew. To the vexation of the Italian carrier's unions, Australia's Ansett Worldwide Aviation Services is supplying two planes and their crews as part of Alitalia's turnaround effort. Ansett, owned by media magnate and union scourge Rupert Murdoch, delivers operating costs that are at least 35% lower than on Alitalia's fleet.

Angry at what they see as a brazen bid to circumvent costly union contracts, pilots and crews struck the airline Feb. 13 and 14, and it canceled one-third of its flights. They returned to the bargaining table Feb. 15.

But no-nonsense CEO Roberto Schisano says he is bent on cutting costs at Alitalia, which lost $172 million last year. The problem is low productivity. Alitalia pilots earn around the $100,000-per-year European norm, but work far less than most. Schisano has rejected a union plan to hike pay in return for more hours in the air, saying previous such deals failed. He has to hope that the Italian government, Alitalia's main shareholder, won't cave in to union demands.

The pressure is especially intense because Europe's flag-carrier airlines face a U.S.-style deregulation in 1997. Then, low-cost upstarts can begin taking traffic away from them.