Biz Watch

They're Still Just Winging It
Alitalia has crash landed in a field of Catch-22s. The majority state-owned Italian carrier, which loses about €1.2 million a day, desperately needs a government bailout to avoid bankruptcy. But any rescue plan risks a veto from Brussels on antitrust grounds. Labor Minister Roberto Maroni promises the government will sign an emergency decree this week, reportedly set to dole out €120 million to Alitalia and Italy 's smaller carriers this year. That would keep the flagship airline afloat and avert disastrous labor strife.

But even if the bailout gets past E.U. competition czar Mario Monti, there's a more far-reaching conundrum. Analysts say Alitalia's long-term survival requires further privatization and a merger with another major airline. But Alitalia is in no shape to merge. A Europe-based manager of a U.S. airline scoffs at Italy 's latest plan, which foresees layoffs of 1,100 and fiscal help from fuel tax cuts. "That's just spit in the ocean,"

INDICATORS Fashion A La Mode Luxury-goods group Gucci named ice-cream and frozen-food executive Robert Polet as its CEO. Polet, who has no professional fashion expertise, has spent his career at consumer-goods titan Unilever. And No Butts E.U. farm ministers agreed to phase out production-linked subsidies for the region's tobacco growers — located largely in Greece and Italy — by 2010. The deal for so-called Mediterranean crops will also slash subsidies to cotton and olive producers. Dust To Dust France closed its last remaining coal mine, bringing an end to the nearly 300-year-old industry. Nuclear power provides the country with 80% of its energy needs.

he told TIME. "You've got to fix the problem." A genuine fix means massive job cuts, which requires real political courage in Rome . Just another Catch-22.

Ford Has A Better Idea: Profits
Has the stalled auto industry turned a corner? Ford last week announced that profits at its global automotive operations almost tripled in the first quarter to $1.8 billion, the first time since 2000 that the Michigan-based carmaker booked more from selling autos than customer financing. Revenues climbed worldwide: spiraling new car registrations in Europe lifted Ford's sales in the region by almost one-third. With cumulative losses of $6.4 billion for 2001 and 2002 disappearing in the rearview mirror, the firm's earnings trumped crosstown rival General Motors' for the first time in three years. While GM beat expectations with profits of $1.28 billion in the first quarter, poor results in the U.S. and Europe dented strong earnings in Asia . Still, it could be worse; Mitsubishi Motors is facing an empty tank. Germany 's DaimlerChrysler won't rule out dumping its 37% stake in the Japanese firm, after killing speculation last week that it would stump up several billion dollars to rescue debt-ridden Mitsubishi. Investors sighed with relief: DaimlerChrysler stock shot up over 7% on the announcement. A global turnaround? Not yet. Speed limits vary. — By Adam Smith

Hard To Swallow
Swiss drugmaker Novartis accepted an invitation for merger talks from Franco-German Aventis. A deal won't be easy: the French government is against foreign ownership of Aventis, favoring the hostile €46 billion bid from its own Sanofi-Synthélabo.

The Bottom Line
	It's time E.U. regulators took the trouble to learn about the industry they are misregulating.
		GIOVANNI BISIGNANI, head of the International Air Transport Association, on Brussels ' move to boost compensation for delayed flights