As I wrote about yesterday, Alitalia employees essentially just voted in such a way that the airline will shortly be going out of business (or perhaps the way they see it, they’re calling the bluffs of management and the government and expecting to be bailed out for the umpteenth time).
Alitalia has been in a terrible financial situation for a long time, though it has been especially bad lately. They’ve been on the verge of liquidation, but for political reasons got a new business plan approved by the board that would have kept them alive (see yesterday’s post for more on that).
However, the new business plan being approved was contingent upon layoffs and also employees taking pay cuts, and that’s something employees voted against. As a result, Alitalia is out of luck — their creditors won’t fund their new business plan (or more accurately they don’t have a new business plan, since it was contingent upon employees agreeing to it), the government won’t bail them out, and the airline will run out of cash in the coming weeks.
Today, Italy’s transport minister, Graziano Delrio, has announced that Alitalia will be sold to the highest bidder, and that the government absolutely won’t bail them out. Per DW:
“Somebody believed that there would have been yet another public rescue. I will say it clearly: there will not be one,” he told the La Stampa newspaper.
Asked about the possibility of Lufthansa, Europe’s largest airline, taking over the ailing airline, Delrio said: “There are no obstacles, but it is up to shareholders to take decisions. The ball is in their court.”
Italian press reports have repeatedly speculated about a Lufthansa bid, but the German firm has not expressed any interest publicly.
However, with rumors of the airline only having enough cash to keep flying for 2-3 weeks, the government does say that they’re willing to offer Alitalia a bridging loan:
In another interview, industry minister Carlo Calenda – who brokered negotiations on the rejected rescue plan – said the government would only be prepared to offer Alitalia a six-month bridging loan worth between 300 and 400 million euros. The funding was intended to keep Alitalia’s flight operations going until a new owner had been found, he told the Radio 24 broadcaster.
With all parties (employees, Alitalia management, and the government) standing firm, it will be very interesting to see what happens next. I wouldn’t be surprised to see a deal made with another European airline, though I hope they know what they’re getting themselves into. It certainly won’t be business as usual much longer for Alitalia.
Personally,(As much as I would love them to cause they seriously need more members in their lead alliance, Oneworld), this opportunity does present IAG with a tough dilemma. On one hand, they would not want Alitalia to end up like Swiss (when the latter walked away from Oneworld and ended up under Lufthansa group's grasp), but on the other hand, they would also not want to recruit a carrier and end up having it go...
Personally,(As much as I would love them to cause they seriously need more members in their lead alliance, Oneworld), this opportunity does present IAG with a tough dilemma. On one hand, they would not want Alitalia to end up like Swiss (when the latter walked away from Oneworld and ended up under Lufthansa group's grasp), but on the other hand, they would also not want to recruit a carrier and end up having it go under (What happened with MALEV, Mexicana, and Kingfisher) that left Oneworld in the weak position that it is in. The IAG and Oneworld also have strong ties to Meridiana, so that would also be a factor in this decision.
We Italians are used to inept government making stupid decisions and are all bracing ourselves for the next bailout, despite the fact that the vast majority of us are opposed to it. Why should we invest in something that just provides us with awful service?!
If a state-subsidised Middle-Eastern carrier can't make them solvent, any market-based EU carrier would be crazy to try.
I am based in Rome and hold Oneworld Emerald and Star Gold...
We Italians are used to inept government making stupid decisions and are all bracing ourselves for the next bailout, despite the fact that the vast majority of us are opposed to it. Why should we invest in something that just provides us with awful service?!
If a state-subsidised Middle-Eastern carrier can't make them solvent, any market-based EU carrier would be crazy to try.
I am based in Rome and hold Oneworld Emerald and Star Gold membership. I avoid AZ as much as possible.
Would anyone buy a ticket on al italia now for the summer?
The Pope flies Alitalia (on the way out, anyway). As if the funny dress and the celibacy weren't irritating enough, the poor guy's going to have to go Ryan Air now. It might be enough to send him over the edge.
so I am holding tickets for an internal flight this fall, CTA-LIN
what to do??
Willy Walsh must be licking his lips, so too, Maybe even Tony Fernandez. Might dovetails nicely with his new European desires ex SE Asia
Whatever the outcome, I totally agree that the sale will be routes, slots and aircraft, not the airline!! But I personally think its a great shame when you think of probably one of the most stylish crews ever, going back eons, and Italian style should win. However, it seems Italian laziness did!
Don't bet on the sale and don't put your money on bankruptcy either !
Ryan , LH and AF save the requiem , AZ wings will never see MARANA AIR PARK !
Alitalia has gone through severe turbulence before but unlike many other already defunct flag
carriers has alway broke through the storm ! Of course wings a little bent but flyable !
The brazen vote of workers is knowing that the gov't...
Don't bet on the sale and don't put your money on bankruptcy either !
Ryan , LH and AF save the requiem , AZ wings will never see MARANA AIR PARK !
Alitalia has gone through severe turbulence before but unlike many other already defunct flag
carriers has alway broke through the storm ! Of course wings a little bent but flyable !
The brazen vote of workers is knowing that the gov't will eventually bail them out !
No G man wants the finger pointed at for turning the lights off and sending people home !
No way , rationale doesn't work like this in this issue !
You can only get a real insight into this if you are Italian like me !
Was lamenting to my wife that Alitalia might liquidate, and she responded "if Alitalia liquidates, does it become a nice Bolognese sauce?"
Doesn't Etihad own 49% of Alitalia, or am I out-of-date?
We have two Business tickets end October returning Nov 8. Not cheap. Now really worried.
I'm with Chris: "A bridge to nowhere, but please don’t call it a bailout." LOL
The Italian govt will simply hand out 'bridging loans' to get around the EU objections, and they will continue to do this until they run out of money themselves. Ignore any political bluster about letting AZ sink or swim.
The idea that AZ will be allowed to collapse or be shuttered, right before an Italian election, is simply delusional. The workers have been criticized as turkeys voting for Christmas but they're simply playing a high...
The Italian govt will simply hand out 'bridging loans' to get around the EU objections, and they will continue to do this until they run out of money themselves. Ignore any political bluster about letting AZ sink or swim.
The idea that AZ will be allowed to collapse or be shuttered, right before an Italian election, is simply delusional. The workers have been criticized as turkeys voting for Christmas but they're simply playing a high stakes poker game, one where they hold a junk hand but the other players have always folded regardless.
Ben - do you have a recommendation for someone with an upcoming Alitalia flight?
The only one who has the stomach to take on this St. Jude of a cause would be IAG, but it would be extremely painful (for all sides) and expensive. The only thing AF/KL has in common with AZ is they're all members of the same alliance. AF/KL do very little with AZ, having given up trying to work with the carrier a few years back. It's really pretty simple: This company needs to liquidate....
The only one who has the stomach to take on this St. Jude of a cause would be IAG, but it would be extremely painful (for all sides) and expensive. The only thing AF/KL has in common with AZ is they're all members of the same alliance. AF/KL do very little with AZ, having given up trying to work with the carrier a few years back. It's really pretty simple: This company needs to liquidate. If someone wants to fly in and scoop up the ashes to form a new Alitalia, with all-new labor contracts with everyone at new hire prices and benefits, then more power to them. Anything else is just perpetuating the inevitable.
No bailout... but a 6 month "bridge loan" of 300-400m euros??
hahaha. Looks like the government caved in already. A bridge to nowhere, but please don't call it a bailout.
Lucky, start a gofundme or Kickstarter crowdfunding. Benjamin Schlappig for CEO.
Wonder how much they'd be asking. I mean sure it looks like shuffling the deck chairs on the Titanic, but if you could re-structure, it would be kinda cool to own an airline, rite?
@Ryan
No, you should be 99% ok.
I have to agree with a couple other comments here. I think that Air France-KLM makes the most sense as a buyer, more so than Lufthansa. While AF-KLM hasn't had a history of expanding to new European airline ventures like Lufthansa has, they have an interest in ensuring Lufthansa Group doesn't lock down the European market and already have a level of relationship with Alitalia through Skyteam.
Given IAG just made a move to take...
I have to agree with a couple other comments here. I think that Air France-KLM makes the most sense as a buyer, more so than Lufthansa. While AF-KLM hasn't had a history of expanding to new European airline ventures like Lufthansa has, they have an interest in ensuring Lufthansa Group doesn't lock down the European market and already have a level of relationship with Alitalia through Skyteam.
Given IAG just made a move to take on Aer Lingus, I don't see them attempting to edge in on this one.
I'm flying Tokyo -> Rome -> Madrid and back on Alitalia May 3rd and May 15th....should I be worried??
Ford's Daddy should buy it for you.
If you're planning on flying AZ for the summer season, it's safer if you switch plans.
If your time frame is more limited (more or less a month) there should be no problems.
It is a dead airline and have been for a long time, no reason to try and save it
Crowdfunding, and we can appoint lucky as the CEO.
Can we crowd source the Alitalia purchase? I'd be willing to invest 99 cents and there are probably millions who would invest likewise. To assure the airline is profitable we could hub it out of Don Quijote International in Spain where costs are low.
I can't see IAG, AF/KLM or LH wanting to get mired in this. Time and time again bailouts have fired. Might as well light a pile of euros on fire. Much easier to let them go under and be ready to pick up traffic. Trouble is, it's unlikely the Italian government will allow them to go bust.
If I have paid travel on Alitalia this summer which was booked through Delta, should I be worried about losing the flight/money? Thanks.
The Germans being expected to bail out one of their European counterparts?!?! Who would have thought that possible!!!!! lol
@keitherson I agree. The only downside I see is way fewer intra-European flights to Linate, which is very convenient for a lot of business travelers.
bad idea to book future travel with them?
and it may be Air France's best shot at expanding.
Most likely a Delta "buying" PanAm deal.
Buy the routes, buy the planes, but not the airline.
@Norm If you used another airline's miles to book flights on Alitalia and the AZ flights are cancelled, you should be accommodated at no expense to you, even if there is no availability. Might be tough though.
If you used Alitalia miles to book flights on Alitalia, you might be out of luck. If you used their miles to book on a partner airline, it's tough to say.
I have two business tickets with miles. What normally happens? Will I be able to recover any of it?
Do you think they'd do well if they merged into AirFrance-KLM, used FlyingBlue as their award program and then completely change their fleet to 787s for long haul and 737s or regional jets for short hauls?
They're competing with a ton of airlines in Europe and a huge chunk of traffic flows thru IAG, Lufthansa Group and AF-KLM. Turkish and Aeroflot also have sizable chunks as well.
Unless they can shed union obligations through a mechanism like bankruptcy, I doubt there will be much interest in the airline. If there is interest, it would be to simply buy to liquidate. Those planes could be flown by a labor group willing to work with the airline to ensure survival.
I am pro-union, but when labor isn't willing to take concessions to ensure the viability of the airline, everyone loses. There obviously is...
Unless they can shed union obligations through a mechanism like bankruptcy, I doubt there will be much interest in the airline. If there is interest, it would be to simply buy to liquidate. Those planes could be flown by a labor group willing to work with the airline to ensure survival.
I am pro-union, but when labor isn't willing to take concessions to ensure the viability of the airline, everyone loses. There obviously is a huge flaw in their business plan, whether it be labor costs, pricing structure, etc. Why buy an organization that can't be fixed or seems unwilling to help be part of a solution to fix itself.
Luckily, there will soon be 11 older 777s coming on to the market soon to help further depress the used widebody market. Delta, pounce!
I hate this airline and wont regtrt its dissapearance,probably the worst european airlone.
Cue Ryanair, Wow Air, Norwegian, etc...
If I buy Alitalia Airlines, will it be coded as travel?
Does Italy not have bankruptcy systems?
Not sure how far behind this airberlin is either. Lufthansa is leasing a lot of their planes and crews at a loss to keep competitors out of Germany.
Next step in european consolidation. With the Lufthansa group and IAG acquiring quiet a few airlines now, makes you wonder what AF/KLM is up to, will they invest in a new airline or just stay as a dual (triple if you count Transavia) "group"
Good riddance.