On the surface, Italian airline Meridiana’s deal with Qatar Airways looks awful. According to a statement posted by the Italian government on Wednesday, Meridiana, the trade unions, and the state have agreed that 396 employees – almost one third of the airline’s total – will be fired, pilot and cabin crew salaries will be cut 20%, and employee contracts will be reduced from 5 to 3 years. (Another 250 employees have already taken voluntary layoffs, according to reports.) In exchange, Qatar Airways will buy a 49% stake in the airline from its privately-owned parent company AKFED.
So why isn’t there outrage over this deal? The answer is that Meridiana is a basketcase, and is in danger of collapsing entirely without a deep-pocketed external investor. The beleaguered airline has not made a profit since 2008, and is being kept afloat by its parent company. But according to Akbar Al Baker, Qatar Airways’ CEO, AKFED would not “pump any more money” into Meridiana, putting it on a potential course to bankruptcy. An MoU with Qatar Airways was signed in February, but its acceptance by the unions stalled over working conditions. However, they ultimately came around it because the alternative was far worse. Meridiana warned in April that if the unions did not agree to the deal, over 955 jobs (out of 1,600 total) would have to be cut.
At least with Qatar Airways as an investor and a flight network partner, Meridiana has a chance, and some of those fired workers might be rehired in the future if its fortunes recover. Qatar Airways already flies 70 times per week into Italy, and the deal stipulates that Qatar and Italy are to consider further traffic rights to expand the Gulf carrier’s Doha-Milan-Chicago route. Al Baker has ambitious plans for Meridiana, and this deal — however painful — is the airline’s best hope.