For over a year now, Alitalia has been more or less bankrupt. Last March, Alitalia announced a restructuring plan, given how much money the airline was losing. Employees voted against this plan, given that they didn’t want lay-offs or pay cuts.
While Etihad previously had a 49% stake in the struggling Italian airline, they decided to withdraw support, realizing that the airline wouldn’t ever become profitable. This was around the same time that Etihad reevaluated their entire partner strategy.
So the Italian government gave Alitalia a loan while trying to find buyers for the airline. They’ve had no luck finding a buyer for the airline, because any rational airline wouldn’t want to invest in the sinking ship that’s Alitalia. Arguably the only way this could ever work out is if the airline liquidates and they start from scratch.
The Italian government said they’d provide a temporary loan and promised they wouldn’t keep funding the airline, though they’ve continued to fund the airline.
I guess this shouldn’t come as much of a surprise, but it looks like the Italian government now has new plans for the airline. They’ve now gone from threatening to cut off the airline to promising to fund them long term.
The Local reports that the Italian government is now proposing that they renationalize Alitalia by taking a 51% stake in the struggling carrier, to make Alitalia a flagship of “Italo character.”
The proposal is that the government would take a majority stake, while a new private partner would take over the rest of the airline. Italy’s Minister of Infrastructure and Transport said the following while discussing the plan:
“We will bring the company under the national flag, with 51 per cent in Italy and with a partner that makes it fly.”
Then Italy’s Minister of Labour and Industry said the following:
“We wrote it clearly in the government contract and now we are following exactly that road: Neither rescue, nor survival, but a re-launch within a strategic transport plan that makes Alitalia a competitive national carrier.”
This is just so delusional. So the Italian government isn’t going to “rescue” the airline, but rather is going to “re-launch within a strategic transport plan?” All while the government is the primary shareholder? There’s simply no way this is going to end well. Beyond that, what partner would want to take a 49% stake in the airline when the government owns the other 51%?
What makes the timing of this especially interesting is that Air Italy is presently growing like crazy, and wants to become Italy’s new “national airline.” This comes after Qatar Airways bought a 49% stake in the airline. Qatar Airways plans to send 30 Boeing 787s their way, so over the coming years the airline will have a longhaul fleet that’s larger than Alitalia’s.
It sure seems to me like on some level the Italian government is trying to stop Air Italy’s growth. It’ll be interesting to see if that just comes in the form of competing directly with them, or if they’ll put some policies in place to stop Air Italy.
This whole Alitalia saga is just the definition of insanity, as they do the same thing over and over, and expect different results.
What do you make of Italy’s plan to take over a 51% stake in Alitalia?
(Tip of the hat to Live and Let’s Fly)