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An Alitalia A320 painted in a special Jeep Renegade livery. (Photo: AirlineGeeks | William Derrickson)

Future of Alitalia Reaches ‘Crucial’ Stage with European Regulators

Talks between the Italian government and the European Commission (EC) on the future of Alitalia are at a ‘crucial’ stage, according to Bloomberg. The Italian carrier went bankrupt in 2017, and the consortium created to oversee its future strategy, Italia Trasporto Aereo SpA (ITA), has been requested to provide clarity to the EC on aspects of the airline’s 2021-25 business plan.

The commission is apparently seeking assurances that the future strategy of the carrier will provide ‘economic discontinuity’ from the airline’s structure which failed four years ago. Since Alitalia went bankrupt, it is estimated that the Italian government has pumped $1.56 billion in bridge loans and $360 million in interest into the carrier. Bloomberg also reports that the Italian government has further allocated $3.6 billion for capital injection and the formation of the new company.

Of particular concern to the European Commission is the Italian government’s plan to retain the airline’s handling and maintenance operations whilst handing the aviation assets over to ITA. The handling and maintenance entities would then be sold in an open tender by the Italian government. According to chief executive officer Fabio Lazzerini, the new company would then be seeking to enter into an agreement with another European carrier, though speculation in the Italian press on Thursday named Alitalia’s SkyTeam alliance stablemate Delta Air Lines as a potential partner for the new entity.

Alitalia’s first flight to Washington Dulles in 2019 (Photo: AirlineGeeks | Ben Suskind)

Italian ministers of the newly-formed government of Prime Minister Mario Draghi were scheduled to talk with European Union commissioner and antitrust chief Margrethe Vestager on Friday morning. Vestager has previously indicated measures which she believes the Italians should apply to go some way to satisfying EU requirements. These included divesting from takeoff and landing slots at Milan’s Linate airport, the adoption of a ‘viable business model’ and a change of name.

Alitalia has failed to turn a profit since 2002, and it is estimated that since 2010 the Italian government has injected $6.43 billion into the airline. However, the Italian aviation market is still considered one of Europe’s most lucrative. As recently as Thursday, Carsten Spohr, chief executive of Lufthansa, cited Italy as his company’s second-most important foreign market after the United States. Prior to the coronavirus epidemic the Lufthansa group had confirmed interest in Alitalia though the current bailout conditions from the German government prevent any large acquisitions.

A joint statement issued by Italy’s economy, transport and industry ministers on Friday stated that talks next week would work on “possible solutions to ensure that the new air carrier is created as soon as possible in accordance with the procedures of national and European law.” It is expected that any new airline entity to emerge would be significantly reduced in size with some estimates citing a 50 percent reduction in the fleet and a similar percentage reduction in employees. A pre-CoVid Alitalia operated with almost 100 planes and around 11,000 staff.

John Flett
John Flett
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