I’d take a poll on how many people are surprised to hear that Alitalia looks like it has cheated death once again, but I know the answer. Nobody is surprised, and you shouldn’t be. This airline will live on forever, and that’s good news for me. It appears they will remain the worst airline ever for the foreseeable future.

The last of the unions has finally buckled, and now the Italian investor group will be able to do its magic. Alitalia will now be merged with Air One and only the “profitable” parts will survive, or so they say. I’d expect to see the long haul routes be hurt the most in these cuts, but hopefully other parts will be slashed as well. They need it. Total expected cost to the taxpayer? Expected to be a mere 2 billion euros. Sounds like a drop in the bucket compared to the US financial bailout, but we’re talking about one small airline here.

Now the last big question is . . . will they partner with Lufthansa or Air France/KLM? Both airlines are angling at a minority stake, but it sounds like the government likes Lufthansa best, so I’m sure that’s what will happen. This would be another remarkable addition for Lufthansa on their latest buying spree. For those keeping score, they now own Swiss, they bought half of SN Brussels (with the rest to be bought later), they have rights to buy bmi, and they’re in talks with SAS and Austrian. This ignores their regional carriers. That’s a huge chunk of European aviation that would be under Lufthansa’s control.

Now that it’s clear that Alitalia won’t be going anywhere, it makes more sense for these airlines to try to grab a piece of them. This is probably the only way to get a real foothold in the country since the Italian government won’t let anyone succeed if it’s at Alitalia’s expense. So, if they want in to Italy, this is the way to go.

Lufthansa already has an agreement with Air One, and they serve a great deal of Italian traffic through their Munich hub which is only an hour away from Milan by air. So they’d clearly like to keep their involvement there. On the other hand, Air France already has Alitalia as a Skyteam partner, and now that they have a chance of survival, they’ll want to keep them around as well.

Let’s see how involved the Italians get in this process. Undoubtedly, the government will step in and make things more difficult than they should be. Stay tuned for more fun-filled antics from the worst airline ever in the coming weeks.

I’m sure I’ll get another comment saying that I’m obsessed with Alitalia, and you know what? It’s true. This is far more entertaining than any soap opera, but there is important information to be had here. Do NOT book any flights on this airline.

As predicted, the unions couldn’t quite figure out that without a reduction in force, they’ll all be jobless, so they marched forward in protest. This is actually a photo from a union rally with what I’d like to think was going through their heads at the time.

Will this really be the end? Of course not. Sure they may shut down the airline, but they’ll just resurrect it again without all that debt and without those insane union members who have sealed their fates through their stubborn behavior. They’ll probably give it a fancy new name, just like in Greece where Olympic is being shut down. But don’t worry. They’ll still have all the same underlying problems to keep us entertained.
[Original Photo: Alessandro Bianchi/Reuters]

“The Germans marched into Brussels today as they discussed further cooperation with the Italians.”

I can’t say I ever thought that statement would be looked upon favorably, but that’s exactly what we’re seeing now. Yesterday, Lufthansa purchased a 45% stake in Brussels Airlines and they continue to talk about rescuing Alitalia. This would be good news for both those airlines and for Star Alliance, but the other alliances aren’t going to be so happy. If you have miles with SkyTeam or on American, you’ll want to watch closely.

First, let’s look at the Brussels Airlines deal. You may not have even heard of Brussels, but you probably knew the name Sabena. That airline, one of the oldest in the world, failed earlier this decade. From its ashes, Brussels Airlines was created but in a slimmed down form. After being combined with the floundering Virgin Express, Brussels now focuses on flights within Europe and down to former Belgian colonies in Africa. They currently codeshare with American on US flights, but that’s likely to be coming to an end.

Lufthansa will take 45% of the airline immediately with the opportunity to buy the rest of it by 2011. The airline will operate similar to the way Swiss does. Brussels will remain a separate brand with its own headquarters. It’s safe to assume that the airline will join Star Alliance and will ditch American. Actually, we know that Brussels will join Star Alliance. Lufthansa chief Wolfgang Mayrhuber said, “Belgium and Germany as well as the Star Alliance member-airlines will profit from the merger.”

So if you have American miles and you want to fly Brussels, you might want to book soon. Nothing has been announced and they’ll likely give some notice before the partnership ends, but it’s going to happen. Just be ready.

Meanwhile, Alitalia continues to sink deeper into the abyss. The Alitalia unions incredibly would rather all lose their jobs than cut their wages and lose some jobs. So, they won’t agree to the restructuring and the previous coalition has walked away for now. So what does PM Berlusconi do? He looks to Lufthansa, calling them an “ideal partner.”

Yeah, ok. So if you’re a SkyTeam mileage earner, Alitalia could end up leaving, but I’d be more concerned that they cease to exist instead. Don’t book them until (if) this situation is resolved.

It’s been a busy week for Alitalia, and once the dust settles, we might finally have a solution regarding who is going to take a stab at fixing this sorry excuse for an airline. As promised, Intesa Sanpaolo has cobbled together a rescue plan. While this one seems more likely to work than any of the previous attempts, I’m still skeptical.

This plan gets a big group of Italian investors (up to 17, it appears) to put money into the airline, take over large domestic player Air One in the process, and slim down to a profitable operation.

It all sounds promising, right? I mean, you’ve got Italian turnaround expert Roberto Colannino leading the charge, so PM Berlusconi won’t start whining about how it’s not an Italian-enough group of people. Is it the best plan for Alitalia? Probably not. That died with the Air France/KLM debacle last year, but this certainly isn’t a terrible option.

And it does appear that the new Alitalia wants to work with one of the big three European groups. Air France/KLM was always the expected winner of that race, but there’s been talk of Lufthansa and now even hints of British Airways in the mix as well. Air France/KLM, it’s rumored, is talking about purchasing a minority stake in the new airline.

So all seems rosy, right? Not so fast. As usual, this deal depends upon the unions being willing to go along. They’re “hoping” to keep layoffs below 5,000, but my guess is that the unions won’t be too happy about that at all. Oh boy, more union fighting. Let’s see if they can somehow push this one through.

Oh Alitalia, why can’t you have any really exciting news? Instead, we just get to watch Italian PM Silvio Berlusconi try to pull his foot out of his mouth and find a way to do exactly what he said he wouldn’t; get an foreign carrier to fix Alitalia. Good luck with that.

Remember how Silvio wanted to keep Alitalia Italian? And how that killed the airline’s best prospect for survival, a takeover by Air France/KLM? Yeah, well I had to laugh when I saw the International Herald Tribune headline, “Italy gov’t in Alitalia talks with foreign company.”

I think it’s time to get a little cranky here. What the hell is wrong with the Italian government? They had a perfectly good solution that is now gone, and they’ve let millions of euros just drain away as they sit with their thumbs up their asses. It’s time for some action instead of just bombastic talks. Oh sure, Berlusconi’s words make it sound like things are moving along.

We already have an industrial plan, the partners and the necessary capital, and we are negotiating with a big foreign company for an alliance at the international level.

Sounds good, right? But I think the IHT says it best.

However, the government has failed to present its plan by an end-of-July deadline, and no significant development is expected to be announced during the summer.

I’m sure the government is all too busy going on holiday during the month of August to bother with something like this. Just imagine how much money disappears into this black hole daily? Will someone just get this over with? Pull the bandage off quickly instead of slowly peeling it off.