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.
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.
“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
Up until now there have been two main companies in the spotlight as potential investors:
- 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.
- 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.
Interest from airlines remains
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:
- 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.”
- 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.
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.