There has been talk of German airline Lufthansa investing in bankrupt Alitalia for several years. Now, the Italian Government seems to be coming up with a plan to turn all the talk into something tangible. Today, reports emerged that the struggling Italian carrier may undergo restructuring to meet the terms of Lufthansa’s investment.
A step in the right direction
Local outlets across Italy today began reporting on a three-step plan created by the Italian Government to encourage Lufthansa to invest in struggling national carrier Alitalia. Alitalia was declared bankrupt back in 2017 after years of losses due to competition from carriers such as Ryanair and easyJet.
The Italian airline is only able to keep flying thanks to a steady stream of public money. The Italian government announced it would give the airline a €400 million ($485 million) loan back in 2019. But the Government’s plan was always to find another partner to help get the airline back to a profit. Enter Lufthansa.
The German national flag carrier has been the Italian Government's target for a while now, with a special team of managers and administrators tasked with making changes to the airline to lure in the German giant. Lufthansa successfully turned loss-making airlines Swiss, Austrian Airlines, and Brussels Airlines into profitable airlines.
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A three-step plan
Lufthansa said from the start that changes needed to be made. Now, it seems these alterations are starting to happen. Local reports suggest a three-part plan, step one of which will see Alitalia assets passed to subsidiary airline Cityliner.
For the second step, the Government’s Ministry of Economy would then take over this new airline. At this stage, it would be a much smaller operation than the current airline. The third step would then see Lufthansa invest in this new Cityliner/Alitalia airline.
This plan comes just a month after Lufthansa representatives traveled to Rome and spoke directly with the Italian government about its protentional plans for the airline. At this meeting, Lufthansa made it clear it would not invest in Alitalia in its current state.
If the plan is successful, then the two airlines would join together to form a partnership. This partnership would see them codesharing flights, coordinating flight schedules, and coordinating sales.
Will it be a success?
The only available details of the plan suggest the government is prepared to make the changes necessary to keep Lufthansa happy and make this a success. But it’s a long way off. The changes to Alitalia would take at least six months to implement. In addition, Alitalia would have to switch from being a Skyteam member to joining Lufthansa at Star Alliance. This would likely take over a year.
Lufthansa also seems pretty keen to make it a success. The airline has bases in Frankfurt, Vienna, Munich, and Zurich, so a southern base in Rome would help the airline grow. With both the Government and Lufthansa seemingly keen to get Alitalia back in the air, we could be seeing big changes soon.
What do you think of the plan for Alitalia? Is Lufthansa wise to be interested in investing? Let us know your thoughts in the comments.