Delta Air Lines Will Acquire 10% Share Of Alitalia

After having confirmed in March that Delta Airlines would purchase a 10% share of Italian flag carrier Alitalia, the airline still remains in a state of limbo by not being able to attract a sufficient number of investors.

Delta buys 10% of Alitalia
Delta to buy 10% of Alitalia. Photo: Delta

Plagued by scandals, mismanagement and union problems, Alitalia has now been under administration for two years. It faces the prospect of either being broken up or nationalized by the Italian government.

A deadline of next Monday, July 15th, 2019 was set by the administrators to allow the troubled airline to find new shareholders. But, with time ticking, a significant chunk of the airline remains up for grabs.

Italian daily newspaper Corriere points out that Italian railway operator Ferrovie dello Stato Italiane SpA will own 35% of the company. The other shares committed to are the Italian Treasury, 15%, and Delta Airlines, 10%, leaving 40% of Alitalia still needing a buyer.

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While speaking to Bloomberg, head of Italian transport union Uiltrasporti, Claudio Tarlazzi said:

“Alitalia can’t afford to lose more time, talks about possible shareholders are just political solutions at this stage, what Alitalia needs is an industrial plan and an investment strategy.”

The main focus of Alitalia’s revival depends on the setting up of a new company and the ability to liquidate the old company along with all its debt. This would effectively allow Alitalia to start over with assets and a clean slate.

Who could buy the remaining shares?

This question remains as confusing as Italian politics, with newspapers speculating for months that the ideal candidate would be Benetton.

Benetton could buy the remaining Alitalia shares. Photo: Mark Finlay/Flikr.

Not only does the Benetton family own a fashion empire, but it also has an industrial arm, that among other things operates some of Italy’s biggest airports.

According to Reuters, two sources with inside knowledge claim that Atlantia SpA, (Benetton’s industrial arm) is likely to bring up the idea of buying into Alitalia at a board meeting that was held today.

Italian business newspaper Il Sole 24 Ore printed a story on Wednesday carried by Reuters claiming that Atlantia was considering buying the remaining Alitalia shares for around 300 million euros ($336 million).

As already mentioned, politics in Italy are never simple. When you put Luigi Di Maio, the leader of Italy’s Movimento 5 Stelle in charge of finding a buyer, it becomes more difficult still.

Movimento 5 Stelle, or The Five Star Movement, gained popularity in Italy with their five-point manifesto which was: Environmentalism, public water, sustainable transport, sustainable development and access to the internet.

The Genoa Bridge disaster

Do you remember the deadly Genoa bridge collapse last August that killed 43 people? Well, now Deputy Prime Minister Di Maio blames Italian toll-road operator Autostrade per l’Italia SpA for the disaster.

Alitalia jet readying for takeoff.
Benetton could be forced into buying a part of Alitalia. Photo: Mark Finlay/Flickr

Autostrade per l’Italia SpA is, of course, owned by Atlantia. Di Maio wants to take their licence to operate toll roads away as a punishment. This would be a bitter blow for Atlantia as toll road revenue is their biggest earner.

Meanwhile Italian daily La Repubblica reported today that there may be some room for manoeuvre if the government can convince Atlantia to buy the remaining Alitalia shares in return for them not revoking the toll road licence.

Why does Delta want to own part of Alitalia?

Simple Flying reported back in January that suggested Delta’s interest in acquiring a share in Alitalia was because the market in the United States is saturated, with no room to grow.

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

Alitalia has several routes to North and South America that appeal to Delta. With both airlines being Sky Team members they would fit together seamlessly. Alitalia has been poorly managed for years, something that will not be the case if Delta is allowed to run the airline.

What do you think will a deal be done by Monday or will the limbo continue?

When Simple Flying asked Delta Airlines if they had anything they would like to add to our article, the Atlanta based airline wrote back saying:

“Delta continues to work with Ferrovie dello Stato (FS) and confirms that it is interested in becoming a minority shareholder in a reorganized Alitalia.

“Discussions remain on-going and any investment remains subject to Delta Board Approval.

“Delta remains committed to maintaining its partnership with Alitalia in the future.”

4 comments
    1. Hi, Maurizio, Thank you for pointing out that Autostrade per l’Italia SpA is of course owned by Atlantia and not Alitalia. I have just changed it.
      Cheers,
      Mark

  1. I haven’t been more optimistic in years.

    As a (cafeteria) Five Star supporter, residing in the US – this feels like a game-changing move by the Italian administration (if they pull it off). But I’m afraid they will need to do more. Alitalia has struggled; I’d argue not only because of service quality. I’d say Italians have taken air market liberalization WAY too seriously.

    For comparison, how easy is it to get a slot at LHR or CDG. The Economist says not so much.

    https://www.economist.com/business/2017/11/16/the-rules-on-allocating-take-off-and-landing-slots-favour-incumbents

    But what about Rome or Milan? Alitalia has been subjected by heavy long haul competition; ravaged by low-cost competition in Europe (effectively dumping air services); while the lucrative domestic business market was siphoned off by the state funding of the now-famous “Frecciarossa” high-speed rail service.

    It’s essential that the Italian state has a hand in Alitalia’s survival. Italy has chornically ignored the infrastructure south of Rome. It’s absolutely necessary that the state guarantee air service.

    Perhaps it will finally be sustainable to marry the domestic strength of Ferrovie dello Stato and Atlantia’s highway and airport operations with the experience and scale of Delta. Could this finally position the carrier for a win?

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