EasyJet And Delta In Unlikely Partnership To Potentially Takeover Failing Alitalia

UK budget airline EasyJet and US Delta Air Lines are linking up in an unlikely partnership to take over struggling airline Alitalia. In conjunction with Italian state railway Ferrovie dello Stato, the three entities plan to make a joint bid to rescue the bankrupt airline, which was placed in administration for the second time in a decade in 2017.

Could a consortium approach rescue Alitalia?

It’s always nice to hear of new partnerships, particularly on Valentine’s Day, but this one does not look like a match made in heaven. EasyJet and Delta couldn’t be more different, but it appears they are teaming up in an effort to win the bid for Alitalia.

Ferrovie dello Stato have stated that there has been ‘confirmation of interest’ from both airlines in Alitalia, and that their board has agreed to meet and begin talks for a rescue plan. No further details of when or where these talks will take place have emerged as yet.

Ferrovie Dello Stato
Ferrovie Dello Stato are the state railway in Italy

Both Delta and EasyJet previously expressed interest in Alitalia last October, but for the longest time Ferrovie dello Stato have been the preferred bidder in the eyes of the Italian government. As another state owned transporter, it would put Alitalia under full state control, but how much do railways really know about running airlines?

Previously Lufthansa expressed interest in purchasing the bankrupt airline also, although they stipulated there would be some tough conditions attached. It seems these conditions made their offer unattractive to the Italian government, as nothing further has emerged on this front.

Why are EasyJet and Delta teaming up?

A partnership between the two carriers could involve a less costly contract with Alitalia’s staff, which is an attractive proposition to the carriers. Less money in means more money out faster, and a lower risk to the individual companies.

Alitalia is majority owned by the Italian government

Ferrovie dello Stato has always said it wants to take the lead on rescuing Alitalia but has also stated that it will only do so if it can do so with an industrial partner on board. The prospect of having not one but two leading industry carriers on board will give the Italian government confidence that the fate of the flag carrying airline can be saved.

Both EasyJet and Delta come with their own attractive characteristics. Delta have the long haul knowledge and with a HQ remote enough to ensure Italian jobs were secure, they were a clear contender for a partnership with Ferrovie dello Stato.

Delta have been looking like the front runners to buy the Italian airline

However, EasyJet are UK based, giving them a deep knowledge of European routes and networks. Their success in short haul, budget operations promises to turn around the profit making element of Alitalia’s services.

It might sound like an odd partnership, but the meeting of minds and of interests between the three companies could be just the backing Alitalia needs to turn things around.

What does the future of Alitalia look like?

The Italian state majority owned airline has been in trouble for some time now. Owned 49% by Etihad, they’ve been something of a money pit for the Middle Eastern shareholder. A €1.7bn investment wasn’t enough to turn things around, and a further offer of funding was withdrawn as the Italian government refused to let go of the reins.

As a result, the airline was forced to declare bankruptcy in 2017, and Etihad put their share up for sale. Alitalia attempted to make the sale more attractive by buying back their own loyalty program from Etihad last year (and at a bargain price too).

Currently, Alitalia have 98 aircraft, slots at 94 airports and more than 12,000 staff. The combination of cash investments from all three entities, as well as the management skills at both ends of the aviation scale, could secure a brighter future for the Italian airline.