Alitalia Is Currently Losing 700,000 Euros Per Day

It’s been 15 years since Italian flag carrier Alitalia posted a profit. The airline has certainly seen better days as sources estimate it is losing 700,000 euros per day. In the midst of this challenging situation, the Italian government has been trying to find new investors to take the reins. Unfortunately, the latest attempts to save the bankrupt airline haven’t been successful as multiple parties confirmed recently that conditions are still not right to commit.

Alitalia
The future looks not so bright for the Italian carrier. Photo: Alitalia

In addition to losing 700,000 euros per day, the airline has been using funds from a 900 million euro state loan to sustain itself. This is according to Skift, who also reports that the government is preparing 350 million euros in “bridge financing” to keep Alitalia flying. All of these efforts will sustain the airline while it tries to secure new ownership.

Suitors reconsidering

“As things stand, the conditions necessary for Atlantia to be part of a consortium that proposes an offer for Alitalia do not yet exist.” -Official Atlantia statement via Magazine of Travel

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Up until now there have been two main companies in the spotlight as potential investors:

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  1. State rail operator Ferrovie dello Stato Italiane SpA (FS). According to its website, FS is one of the largest industrial companies in Italy. Furthermore, it has been 100% owned by the Ministry of Economy and Finance since 1992, overseeing subsidiary companies in the sectors of supply chain, transport, infrastructure, real estate services and more.
  2. Secondly, infrastructure company Atlantia SpA was interested as well. It claims to be a “global leader in the motorway and airport infrastructure sector operating in 23 countries”. According to its website, the Atlantia Group manages 14,000 km of toll motorway, Fiumicino and Ciampino airports in Italy and the three airports of Nice, Cannes-Mandelieu and Saint Tropez in France with over 60 millions of passengers a year.

Unfortunately, on Wednesday Atlantia said that conditions weren’t in place that would allow it to save the airline from liquidation. Following this was a similar statement from FS, saying it would not be able to set up an investor consortium to save the airline.

This raises the likelihood of a temporary nationalization of the carrier in order to save the company and jobs. The last option, if no credible investor makes an offer to inject fresh funds, is liquidation of all Alitalia assets.

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Interest from airlines remains

Alitalia’s long haul routes appeal to Delta. Photo: Delta Airlines.

At this point two airlines are reportedly still interested despite the pullback from the above companies. However, their desired level of interest may not be enough:

  1. According to a Reuters report, Delta Air Lines Inc is holding steady with its pledge to invest up to 100 million euros ($110.70 million) for 10% of Alitalia. In an email statement to Reuters on Wednesday, the airline said “Our interest and vision have been well expressed to Ferrovie dello Stato and Italy’s Ministry of Economic Development...We are open to working with other parties to develop a coherent, like-minded consortium of investors.”
  2. Skift’s Wednesday report also says that Lufthansa Group has reiterated its interest. However, the German carrier’s plan would involve significant job cuts and a reduction in flights. In fact, according to sources familiar with the matter, Lufthansa wants Alitalia transformed into a profitable new company before making an equity investment.

It’s been two years since state-appointed administrators took over the running of Alitalia. This happened after former shareholder Etihad Airways withdrew its funding. Workers had also rejected a 2 billion euro recapitalization plan. The plan would have meant 1,600 job cuts from its 12,500-strong workforce.

Etihad Airways Boeing 787-9 Dreamliner
Etihad was a former shareholder of Alitalia but withdrew in 2017. Photo: Etihad

With the cash burn rate as fast as it is, do you think there is any hope left for Alitalia? Should it go into liquidation or be nationalized as a state-owned carrier? Let us know by leaving a comment!

We contacted Alitalia for comment. However, no response has been received as of publishing this article.

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Would this be allowed? if delta gave more cash towards Alitalia and use Rome as a hub to push a more global presence into Southeast Asia,India and such?

Sam Rittler

They are essentially a living corpse at this point.

Niklas Andersson

Ciao…. che tristezza storia

William Rosen

Alitalia should be nationalized as a State owner carrier.

Colm

Anyone who invests a cent into the company is crazy! Just ask Etihad…… At this stage let it fail and be consigned to history. A new “national airline” could rise from its ashes but run by an airline not a government!

Mungo

The state-appointed administrators need to be realistic to the options to save this airline. The workers need to understand that some job losses will be inevitable or 12,500 jobs will go! The competition in the industry has seen mergers and take-overs to reduce costs and expand routes available through code shares.
My view is look at Delta or Lufthansa, do it soon before the bank runs dry!

Erik Weseman

I say let Alitalia Airlines die and allow Air Italy to become the new Italian flag carrier. The Italian government is coddling the airline as it will become another Pan Am unless drastic action is taken to save the airline.

1K Tung

I am not sure how they come up with this figure, but this means in average, Alitalia loses 21,000,000 Euros each month. Who would still operate this business with this figure of loss? Besides, lately there is news that Lufthansa wanted to rescue Alitalia out of trouble. I wonder if the analysts and senior management at LH have a plan that can make Alitalia profit more than 700,000 Euros each day. Otherwise, would they invest in a business that would make them lose money everyday? This number seems to be unrealistic.

nunzio

Usual italian politic affair, with money wasted in 15 years and a honest management could be first Airline in world!!!!! what a shame!!!!

Dos

@1K Tung

Alitalia lost €496 Million in 2017, according to their Wiki page. That’s around €1.35 Million per day or €40 Million per month — about twice of what this article states.

Parker West

One of the chief flaws with unions is forcing an entire company to shut down rather than accept desperately needed job cuts. I’ve been reading about the rampant corruption in building the Venice flood gates, now nothing shocks me about Italian politicians

Nick

Have some real fun and read “the dark heart of Italy” and “the pursuit of Italy”. Alitalia will survive forever if you take the lessons from these books. It will never make a profit though either. Italy works in strange ways.