Alitalia; What’s Next?

By David Hopwood | February 18, 2020

Quite a few full-service airlines are in difficulties at the moment. We’ve reported on the trials and tribulations of just a few that are staggering on, including Air India and Flybe. Others that have probably disappeared for good include AtlasGlobal and Air Italy.

Another that’s been hanging on for years is Alitalia.

It’s hard to understand why it’s so difficult to run a profitable Italian airline. The country has the third-largest economy in the eurozone, eighth-largest GDP in the world, the second-largest manufacturer in the EU and runs a large trade surplus. As a tourist destination with Rome, the Amalfi Coast, Venice and Florence, to name just a few, a well-run airline should be making money by the truckload.

Not so.

After being declared bankrupt in 2008 the airline was relaunched in January 2009 when a consortium—Compagnia Aeria Italiana (CAI) bought the ‘old’ Alitalia and promptly sold 25% of the shares to Air France/KLM.  (the relationship terminated in 2017) Various partnerships with other local carriers were explored but failed to make any substantial progress.

Alitalia A330-200 © Venkat Mangudi

In May 2017 the carrier was again declared bankrupt and put into administration. The strategy of the administrators was–like Air India and South African–to stem the losses and sell the airline, given the Italian government declined to nationalise. EasyJet, Ryan Air, and China Eastern all expressed interest but the deals again failed to materialise.

Late in 2019, Alitalia was reported as losing €2 million a day. In December the Italian Industry Minister Stefano Patuanelli confirmed a €400 million loan was given but warned no more government funds would be used to bail out the airline. There’s no doubt that Air Italy hoped to take advantage of the situation, but with some strange choices of destination, bad luck with the 737-MAX grounding and a poor business plan, they came and went.

Florence © The Independent

Alitalia also has intense competition with low-cost carriers, and it hasn’t shown a profit for 15 years but even so, there’s some room for optimism. 2019 revenue was up 10% compared to 2018, the number of long-haul passengers increased by nearly 5% and it’s the second most punctual airline in Europe. The demise of Air Italy hasn’t hurt either, but Alitalia has far to go before it’s sustainable. If it can continue the recent progress and perhaps find a solid partner, we might still be able to visit the glories of Italy on the national carrier.


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