Alitalia looks set to vanish by April 30th

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Everybody somebody has paid to prop Alitalia up over the years. Some shareholders – AF-KLM for one, simply walked away and swallowed the loss, rather get involved again. Italian Governments have poured billions of dollars worth of national taxes into the airline to bail it out time after time. Unions held a stranglehold on the airline and it’s the unions that once again pushed into a situation that it will now likely never recover from.

Etihad piled millions into the airline, gaining a 49% stake and was on course with new managers to turn the airline around. Then last year, it offered a pay and conditions agreement to its workforce that they had known for months would determine the airlines survival. The union over-played its hand, thinking that once again if they said no, the government would be forced to the rescue once again. Times and the law on sate aid have changed. Staff said no, the union rejoiced and Etihad, sick of trying and unwilling to cough up more money, cut off further financial support, forcing Alitalia into bankruptcy. Now nobody wants Alitalia’s staff or their legacy, just their aircraft and routes, it seems.

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On domestic routes Alitalia is being devastated by Vueling and RyanAir, along with the newly Qatar backed and re-branded Air Italy.

Delta, AF-KLM and Lufthansa have all been heavily involved in trying to find ways of rescuing the profitable parts of the long haul network, or recreating it as a new business. Delta and AF-KLM who technically owned 25% of Alitaila at one point but allowed the holding to be minimised when Etihad took over, are anxious not to lose the Italian market for Skyteam – it’s a major tourist and business destination. Lufthansa would want to restructure and rigidly reform the airline and inevitably draw it into StarAlliance.

Worse still for either of them, if Qatar succeeds with Air Italy in replacing Alitalia on long haul, which is what it plans to do, the whole thing could in effect fall into the Oneworld alliance. Frankly I think these worries are very secondary. This is more about who gets what and for how much.

There is one fly in the ointment. US investment company Cerberus – who so nearly destroyed Chrysler, and are bidding to keep the airline intact and can’t be underestimated.

Even easyJet is in on the act and is said to be looking to buy up the entire short-haul fleet.

Administrators time is now running out – decisions have to be made and made soon. Either way it seems clear Alitalia will never be the same again, if it exists at all.

 

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