In news that should surprise exactly no-one, Alitalia once again faces the grim reaper with the airline filing itself for bankruptcy today (2nd May 2017).
Alitalia Airbus A330 at Boston Logan International Airport – Image, Economy Class and Beyond.
According to Bloomberg who broke the news, this is after workers voted to rejected job cuts and concessions which would had linked a €2 billion plan to recapitalise the airline.
The shareholders have placed the airline into special administration, with the airline planning to fly… for now.
A release on the Alitalia site states:
Alitalia’s shareholders meeting, convened today, noted with deep regret the outcome of the referendum among the employees. The negative vote has determined the inability to implement the relaunch and restructuring of the Company.
Italian shareholders and Etihad, based on the strong potential growth of the company, and on an industrial plan which included a structural cost reduction of which two thirds were not related to labor costs, were committed to recapitalise and finance the plan with EUR 2 billion.
This commitment was subject to an agreement with the trade unions, which was rejected by the employees in a referendum.
The Board of Directors, which convened after the shareholders meeting, having acknowledged the serious economic and financial situation of the Company, of the unavailability of the shareholders to refinance, and of the impossibility to find in a short period of time an alternative, has decided unanimously to proceed with the filing for “amministrazione straordinaria” (extraordinary administration) in compliance with the Italian law.
Alitalia’s flight schedule will continue to operate as planned.
Special Administration gives the owners 180 days to turn around the airline, with an extension of 90 days thereafter.
So – are we facing the end of Alitalia as we know it?
I’ve given up how many times I’ve written about Alitalia being in a financial mess, and last time Etihad rode to the rescue with a 49% ownership injection. This has seemingly done nothing in the time it’s owned that share.
With low-cost airlines eating at the bottom (its European network), and other airlines chewing at the top, Alitalia has been vulnerable for way too long.
The Alitalia brand is iconic – make no mistake, and I’m sure the Italian government can try to invest to save it this time.
But the options are thinner than before – they’ve tried Europe using Air France-KLM Group, they’ve tried the Middle East with Etihad which has made no headway.
Could they develop the units of Alitalia? Maybe – if there’s value to be had out of the long haul unit.
For now, Alitalia is back in the position of being on a life-line. Even in the medium term – this won’t be sustainable.
Those who have shares in popcorn are set to do well in this – I expect this to run and run as the Italian government tries to find another unsuspecting company to run this airline.
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