Fate of Italy’s troubled air carrier Alitalia to be decided

Advert Travel Gazette

Italy’s beleaguered flagship air carrier Alitalia is waiting for its fate to be decided as the deadline is nearing in this month.

The cash-strapped airline has struggled for more than a decade, but amid declining passenger numbers, low employee moral, an aging fleet, and operating under bankruptcy laws since May, this month’s asset sale could be Alitalia’s last chance to stay alive as a viable carrier.

The original deadline for binding offers had been Oct. 2, but the Italian government pushed the deadline postponed to Oct. 16 to give bidders more time to submit proposals.

At least one potential suitor, Dublin-based low-cost carrier Ryanair, has said it was no longer interested in bidding for control of Alitalia. The move came after the Italian government opened a probe into Ryanair’s operations to determine whether it broke any laws by canceling more than 700 Italian flights over what the airline said were staffing issues.

Another low-cost airline, EastJet, is still expected to submit a bid for Alitalia, and there are reports that Oslo-based Norwegian Airlines has been gathering the information it might need to evaluate a potential bid.
Italian media reports have also said that unnamed investors from Italy and China could also submit bids for at least part of the company’s operations.

“In most of the scenarios, the goal would be to break Alitalia into parts to resell them, perhaps keeping the name Alitalia in some symbolic way,” Lucio Cillis, a journalist and author of the book “Tutto quello che avresti voluto sapere su Alitalia” (Everything you wanted to know about Alitalia), told Xinhua.

If that happened, Italy would become the first major European country without a flagship air carrier since Switzerland operated without one for a year between 2001 and 2002.

The potential bidder most likely to reinvigorate Alitalia as an autonomous carrier is German flagship airline Lufthansa, Europe’s largest airline when combined with its various subsidiaries.

Lufthansa has made similar moves in the past, rescuing and revitalizing Swiss Air 15 years ago. In 2009, the company also helped revive struggling Austrian Airlines and Brussels Airlines. All three airlines are now operating under the Lufthansa umbrella.
“Lufthansa has hubs in Frankfurt and Munich, along with Zurich, Vienna, and Brussels, but it has nothing in southern Europe,” Giovanni Dragoni, an editor and author of “Capitani Coraggiosi” (Courageous Captains) about a 2011 bailout of Alitalia, said in an interview. “Either Rome or Milan could fill that role nicely.”

Alitalia is not the prize it was a decade or more ago. Ryanair supplanted Alitalia as Italy’s main domestic air carrier in 2014, and with just 9 percent of Italy’s international air traffic the company is a distant third behind Ryanair (20 percent) and EasyJet (12 percent), according to data from Italy’s Ministry of Transportation.

Alitalia’s share is much smaller than other flagship carriers, such as Lufthansa, which with its subsidiaries controls 37 percent of Germany’s international air traffic, Air France, which controls 24 percent of France’s, or British Airways, which operates about 18 percent of the international traffic into or out of Britain.

Whatever happens, Dragoni said he does not expect the 71-year-old Alitalia to regain the place it held among Europe’s premier airlines through the 1990s.

“More efficient competition was already hurting Alitalia then, and now there’s more of it,” Dragoni said. “Alitalia has gotten much weaker while its rivals have become stronger. Can it survive? Yes, probably. But if it does I think the best-case scenario is for it to be a regional player going forward,” he added.

Travel Gazette Ads