Italian Government Takes Full Control Of Alitalia

Filed Under: Alitalia

While many airlines are at risk of going out of business as a result of the current global situation, Alitalia is one of the few airlines that may actually be kept alive because of it.

Alitalia being renationalized

The Italian government has today announced a variety of ways in which they’ll provide aid to businesses, and among those is €600 million of additional funding for Alitalia. With this plan, we’ll see Italy’s Ministry of Economy and Finance form a new state-owned business to run Alitalia.

Up until recently, the government was seeking a buyer for Alitalia, and of course has been threatening to pull the plug on the airline for a long time. The airline has been struggling for many years, though the situation has been especially dire since Etihad pulled funding.

Abu Dhabi based Etihad Airways owned a 49% stake in Alitalia, but in mid-2017 they pulled the plug, realizing they’d never be able to turn the airline around (which isn’t surprising, because I don’t think Etihad can even turn Etihad around). 😉

In reality this is all just business as usual. While the government has been threatening to pull the plug if they couldn’t find investors for Alitalia, it’s clear they were unprepared to do that, given how many bailouts they’ve given to the airline during relatively good times.

Italy’s challenging aviation industry

I see both sides of this. On the one hand, Air Italy liquidated just weeks ago, and losing both Italian long haul airlines in a matter of weeks would have long term negative impacts on the economy.

At the same time, in many ways allowing Alitalia to liquidate and then starting a new airline is perhaps the only way that the airline could actually be reset and have a chance at being profitable.

Up until this point there has simply been a disconnect between what the government has claimed their intentions to be and what has actually happened — there’s no reason anyone would want to buy Alitalia in their current form, and keeping the airline alive for years when that’s obvious seems silly.

Then again, on some level maybe renationalizing the airline makes sense — there’s huge economic value in having a global airline, and it’s not unreasonable for a government to decide that the access to the country is worth the losses.

Bottom line

Rather ironically, of just about all airlines globally, it seems Alitalia is now least at risk of going out of business as a result of this global slump. The government will be once again take over full control of Alitalia.

The only question is if they’re actually going to stick to the plan this time, or if in a few months they’ll start the whole game of trying to find a buyer once again.

Comments
  1. “On the one hand, Air Italy liquidated just weeks ago”

    As did another much smaller Italian airline, Ernest Airlines. And those 2 were before the coronavirus outbreak.

  2. Just ten days ago the Goverment had published the tender for the sale of Alitalia, but no one could imagine a crisis of these proportions. It had opened the phase of the expressions of interest which should have ended at midnight on March 18th. At a time when all carriers had planes on the ground it was unthinkable that anyone could reveal their interest in the whole lot or for one of the three lots: aviation, handling and maintenance.
    The same giant Lufthansa who has just applied for state aid due to the situation and was considered the most credible buyer of the aviation part of Alitalia
    Therefore was an obliged decision for the goverment to renationalizing it. The hope is that once the aviation industry and covid situation will be over, in the next years they will start again the sale process.

  3. The majority of Italians will be outraged and upset about this decision. Tax payers, most of them, want the airline closed once and for all. Yet I disagree with all. In today’s global market no industrialized economy can afford not to have a national airline. The benefit of an airline isn’t the profitability of its business. It is mostly the indirect economy that generates which is way much more than the losses to sustain. So in my view it was the right decision.

  4. There is nothing normal, these days.
    In this case we kind of saw it coming, but a similar situation will happen many more times in the near future. Airplanes are just not flying right now.

  5. Alitalia onboard service = zero.
    Alitalia ground agents = a bunch of angry and useless unfriendly people.

    Also, Milano Malpensa = minimum two hours of customs clearance.

    It sucks in every possible part.

  6. We’ll all be beaming around the world with transporters and the Italian government will still be propping up Alitalia.

  7. @Amica
    I have not had great problems on AZ but to blame them for MXP issues is beyond the pale. Everybody prefers LIN, with the possible exception of pilots.

  8. @Amica – I have flown Alitalia probably a hundred times in the past 20 years and I have never experienced anything remotely close to what you describe. As for MXP, it’s just a typical airport, with the typical wait times. It has great train service directly to the terminals which is quick and inexpensive.

  9. It is for the birds to suggest that “Italian taxpayers want the airline closed down.” Alitalia, whether one likes it or not, provides an essential service in connecting small and medium-sized Italian cities with the rest of the world, as well as the islands, often at subsidized prices. This is hugely important for all those who don’t live in Milan and Rome (80% of the country’s population), particularly given the country’s challenging topography. No private airline, whether legacy or low cost, will ever have an economic interest in flying to cities like Trieste, Pescara, Perugia, Reggio Calabria. At best, private airlines operate on a touristic basis, which means that some airports might go for 8/9 months a year without regular flights. This is hugely problematic, since smaller cities are already experiencing major economic and demographic decline. It then makes all the sense in the world for Alitalia to return to public ownership, and be seen as the provider of a public service which benefits the country as a whole.

  10. Completely agree with Andrea. Alitalia provides infrastructurally necessary services. Plus, I like to fly with them a lot when on holidays in Italy… However, they finally must reduce staff, otherwise they’ll continue to burn way too much money.

  11. Alitalia disappearing would gift Ryanair a monopoly – which Ryanair would ruthlessly exploit. That and Andrea’s points – the right move for the Italian government. The U.K. letting Flybe go bust hindering regional connectivity and further strengthening BA was a massive mistake, happy that Italy not repeating such an error.

  12. @andrea : okay now you’re just supporting Alitalia for the sake of it. Trieste is 1hr10 driving to Ljubljana and 1hr51 to Venice. Pescara is 2hr20 drive from Roma.

  13. @ J
    Were AZ to fail, LH group will be there in minutes. If you pay attention LH is always watching Italy and has daily flights into almost every Italian airport. I and many Italian colleagues prefer to fly LH with connection on intercontinental flights when originating outside of Rome or Milan, since a transfer is anyway involved.
    I do remember LH actually trying to have an airline in Italy and SR also owned Volare.

  14. @henry LAX: the 2h30 (and usually much longer) drive you mention means, in any case, adding many hours to one’s journey, rather than a short feeder flight. It’s also beside the point: regional airports like Pescara or Trieste serve indeed a *region*, where people are often located further away than the city itself.
    Let’s not even mention the islands. Until now, state-subsidised routes to Sardinia and Sicily were officially open to any airline; in practice, it was only Alitalia who ever took them, as they were not profitable from a pure market standpoint – but hugely important to the country as a whole.
    I really do not care about Alitalia as such. But there is a strong point to be (re)made in favour of state-backed flag carriers, as the case of Italy makes clear.

  15. All the unions are happy now
    More strikes more money for management and employees
    And less money for italian taxpayers
    I am glad I don’t pay any more tax in Italy
    Next time when I am flying AZ I will thanks my fellows Italian
    Grazie mille
    Per pagare piu tasse

  16. We need Salvini in power NOW! He is the only real LEADER who has the balls to cut off the disastrous ‘airline’ that is Alitalia. And he is the only one who is smart & strong enough to lead Italy through the current Corona-crisis.

  17. Lost good chance to stop forever this “money eating”airline and using this funds to rebuilt a new one with right staff number and a proper industrialization plan to finally be competitive and profitable.
    But once more just wasting our taxpayers money in some months as from decades, with all billions fired up we could have biggest and efficiency airline of world and likely be most visited country of world.

  18. @Max. If I remember right, Salvini and Di Maio agreed to maintain Alitalia in 2018 (when FS came into play). And I don’t think the brave Italians, fighting the Corona Crisis, would want to exchange Conte for Salvini.
    @nunzio. It seems to me that an efficient Italian airline is a contradiction in terms, at least for the time being. I don’t mean to be a nuisance… but for an airline, being based in a preferred holiday destination might not create enough revenue. The new airline needed a hub for international connecting flights, and, geographically, it cannot have one (as long as Parigi or Monaco di B do not count as Italian).

  19. Ben, please stop this political delirium and out of topic quarrel
    AZ ultimately is the Italian flag carrier de facto for long haul
    It has become one of the most punctual airlines, has its challenges like any other, but serves national interest, it should just begin to serve it better
    I don’t either fly AZ too regularly, but in normal times, flights to Italian destinations of other carriers are swamped with tourists from all over the world who could instead choose AZ.
    Yes, maybe the agreements with Skyteam partners have not been favorable (as they have been for DL, AF) but that’s what an alliance implies
    The need to buy aircrafts to expand routes has not been met with a thin (euphemistically) balance sheet, chances for profit have been hampered by anachronistic union agreements and the cost of labor and goods often has not aligned with the competition
    As for the travel experience, I don’t like the attitude of some, maybe most employees, but over the past many flights i failed to encounter a single negative experience that stood out an inch more than what is ordinary to any other carrier
    An ambitious industrial plan is needed. Other state owned companies in Italy (Trenitalia, Leonardo have been successful in innovating and remain leaders in their sectors, so the pan should be to keep the company as a profitable one, not to make it a prey for future buyers.
    Yet again, it’s all about who wins the next elections.
    So, for now long live AZ, i’d rather pay to bail out out AZ than a bank close to this or that local politician. And maybe I pay for both anyways

  20. @Jack
    I am Italian and I totally agree with your statement. Not even in my worst nightmare I’d exchange Conte with Salvini (and mind you I didn’t vote for any of the two majority party). Just imagine Salvini one day was asking to block everything, every flight, every business. Another day he was proposing to open everything, bars, discos, restaurants etc. (I have the video, not just gossip).

    @Max
    You forgot that Salvini was in power for one month and a half and did not keep one, and I mean not even a single one of his promises. He is a dangerous populist who engaged Steve Bannon sovranist consultant (the same of Trump) and Luca Morisi, who is controlling the most dangerous virtual factory of fake news in Italy. I hope they will remain just a nightmare.

  21. Alitalia sucks since years. Government uses Alitalia to launder money and get votes during the elections. The educational level of overpayed Alitalia’s employees is just ground. The majority of them were Farmers around Italy’s airport that became Alitalia’s employees due to a political connection they had. Then it happened the same with their children and now is happening again with the last generation. Employees enjoy everyday no punishment for serious illegal actions such as angry and aggressive behavior against the customers (the most of the times because Alitalia staff is not able to communicate in English), illegal delay or complete absent from their duties, incorrect use of aviation equipment that lead to severe and expensive damages (taxpayers pay)etc.
    Cancer stops when you cut it from the root otherwise it continues growing.
    Alitalia sucks. Close it now for a better aviation future.

  22. Alitalia is not the only company that can provide subsidized service to connect Italian regions. Any airline can do it, as long as it receives the subsidy to do so. Small islands like Pantelleria and Lampedusa were connected by Mistral Air, for example. Sardinia was connected by Meridiana.
    If you give Air Dolomiti a subsidy to connect Pescara or Reggio Calabria, it will do it.

  23. Hi
    What do we do now my hubby and I bought tickets to go to Italy in July
    Cannot go due to virous
    Hubby is dibetic
    Can anyone give advice for a refund

  24. I personally think that nationalised carriers make a lot of sense for many countries including Italy and am happy to see the EU relaxing restrictions on them for the time being.
    Many companies offer loss leaders, particularly printer manufacturers and companies like Nespresso. Once you buy their product, you then spend money on the profitable things like toner and coffee pods.
    For a nation, operating an airline at a loss gives you the option to increase visitors and to target specific areas where profitable visitors are likely to come from.
    So while I don’t generally support the state completely managing an economy, I think that there are plenty of legitimate benefits of the state ensuring it has an international airline.

  25. Does this airline still exist? I am trying to cancel a flight booked for September because of Covid issues and do not get a reply to any emails, and the only part of the answer phone message I can understand says push 5 for English – I do and nothing happens.

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