The Italian government steps in to save a cut-back Alitalia

 

Under a new government plan to renationalise Alitalia, Italy's national flag carrier is expected to have about 30 aircraft, 3,000 employees and fly mainly short and medium haul routes, with very few long haul services. This will be an Alitalia that looks very much as it did in the late 1950s. 

At present the airline has 113 aircraft, 72 of which are leased and are due to be returned at the end of 2020.

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Because of the Covid-19 lockdown the airline is currently operating limited flights out of Rome's Fiumicino and Milan's Malpensa airport, with about 270 flights weekly.

The government plan will provide €500 million in funding for “airlines operating public service routes” which effectively means only Alitalia.

It is expected that another 2,900 employees will be laid off until 31 October, bringing the total off work to nearly 7,000 out of a total work force of 11,000.

The government's new nationalisation plan would also allow Alitalia to park its present debts and liabilities in a separate company. 

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The troubled Alitalia has changed shareholders several times in the last decade. In 2009 KLM-Air France took 25 per cent of the shares, with an offer to purchase additional shares in 2013 if conditions were right.

Because of continuing restructuring difficulties and union opposition KLM-Air France never took up the option.

In 2014 Etihad, the United Arab Republic's flag carrier, bought a 49 per cent stake and the following year the partnership with KLM-Air France was severed.

Alitalia started another series of cut backs and structural reforms but these never obtained the hoped-for results and three years later it filed for bankruptcy.

EasyJet, Ryanair and even Italy's railways Ferrovie della Stato all showed some interest in buying parts of the old company last year.

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But negotiations dragged on, Ryanair was hit by a series of pilot strikes, easyJet withdrew from negotiations and nothing was concluded, mainly due to pressure from the unions faced with heavy job losses.

It has been three years since Alitalia went into administration, but now that the global coronavirus pandemic has hit airlines worldwide the Italian government has been forced to step in to save the airline as a “strategic asset”.

However, this is only a short-term solution, and the airline will continue to struggle, with a decrease in demand, travel restrictions and suspended routes.

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