For the second time in less than ten years, Alitalia has filed for special administration, taking the first steps toward restructuring, selling, or shutting down the struggling Italian airline. This decision came after the company’s board concluded on Tuesday that the rejection of their latest rescue plan by workers made it impossible to secure further funds from shareholders.
In response, the government has appointed three commissioners to evaluate whether Alitalia can be restructured as a standalone company, partially or entirely sold, or liquidated. To support the airline during this process, Rome has provided a short-term bridge loan of 600 million euros ($655 million) for six months.
Transport Minister Graziano Delrio emphasized the importance of protecting ticketed passengers and Alitalia’s workers until a suitable buyer is found, as the airline holds significant value and is crucial for domestic travel. The appointed commissioners are Luigi Gubitosi, Enrico Laghi, and Stefano Paleari. They have six months to create a viable plan for Alitalia.
The board justified its decision to seek administration by citing the airline’s severe economic issues, investor reluctance to provide further financing, and the lack of a quick alternative. Alitalia assured that its flight schedule would remain unchanged during this period.
James Hogan, the CEO of Etihad Airways, which holds a 49 percent stake in Alitalia after its latest restructuring in 2014, stated that the airline requires extensive restructuring to survive and grow. Without stakeholder support for this restructuring, Etihad is unwilling to continue investing but will remain a commercial partner.
Alitalia is losing approximately 1 million euros daily and would potentially run out of cash by mid-May without the government loan. Competitors like Lufthansa and Norwegian Air have shown little interest in acquiring Alitalia, and creditors are unwilling to lend more money, increasing pressure on the government to find a solution for the national airline.
The government has ruled out renationalizing Alitalia, which was once a symbol of Italy’s post-war economic success but now struggles against low-cost carriers, compounded by a lack of investment in profitable long-haul routes. Many Italians, frustrated by repeated bailouts costing over 7 billion euros in the past decade, urge the government to avoid another political rescue.
With a general election approaching by May 2018, it is widely believed that the ruling Democratic Party will act to prevent Alitalia from collapsing and leaving 12,500 workers unemployed. Former Prime Minister Matteo Renzi, who recently resumed leadership of the Democratic Party, has promised a plan for Alitalia by mid-May, insisting that the airline should not be broken up.
Alitalia was privatized in 2008 after initially entering administration earlier that year.