Behind the spin: Alitalia


Last Updated: 09 Oct 2013

How to stay alive, is the simple answer. The flagship Italian airline staggers from one month to the next, haemorrhaging cash along the way. The company, 49.9% owned by the Italian government, is losing EUR3m a day and has a total debt of EUR1.2bn and rising. It was given an emergency transfusion of funds last month when Italian prime minister Silvio Berlusconi ordered EUR300m of taxpayers' money to be pumped into it. But unless a buyer for the government's stake can be found, Alitalia's time in intensive care may quickly end.


There isn't any. No matter which way you squint at this situation, Alitalia as we know it is heading for an early grave.


Alitalia's last hope was a takeover bid from Air France-KLM in March, but the deal fell through after nine Italian trade unions rejected a restructuring plan. Maurizio Prato, Alitalia's battered chairman, is reported to have said at the time: 'This company is cursed. Only an exorcist can save it' - and promptly resigned. Soon after, Alitalia's management held an emergency board meeting, perturbed by Prato's parting shot to the unions that the firm risked going bankrupt if they did not accept the deal. Alitalia hasn't made an operating profit in a decade but there could be some life-saving potential in Italy's domestic market - an opportunity that Ryanair spotted a while ago. The Irish low-cost carrier has eaten away at Alitalia's European market share for some time now, although government interference, Alitalia's historic mismanagement, and pandering to pilots and crew have combined to drag the airline down.


Berlusconi wants to keep Alitalia in Italian hands. The EUR300m will be used to stave off bankruptcy while a buyer is sought. In his pre-election rhapsodising, Berlusconi promised to find a domestic consortium, but no-one has bitten so far. What with guaranteed political interference and the nightmarish trade-union bargaining that a bidder faces, it's not surprising that the only party rumoured to be interested is Russian airline Aeroflot. What that would do to the Italian national psyche is anyone's guess. And the government's EUR300m loan could be investigated by the European Commission, which has been cracking down on state subsidies in the aviation industry. Rome continues to justify it on the grounds of public order, with officials arguing that chaos could ensue if Alitalia were forced to cancel flights and begin bankruptcy proceedings. Is it buona notte, Alitalia?

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