Without money and in a pandemic, Alitalia has a month to live

Alitalia, the Italian airline, still has money for thirty days. The business is running out of cash. Employees only received the half of your March salary one week late. As part of the remuneration is variable, linked to flight hours, some have only received a handful of euros.

The airline can be considered one of the many victims of the pandemic, but no. In fact, he only survives on the money he received as emergency financial support after the covid outbreak. Help from 24.7 million euros which will soon be exhausted. Alitalia’s problems come from much further.

An anecdote: when I was an industry analyst, Mike Powell, former CFO of Wizz Air and current CEO of Flybondi and Flycana (South American low cost airlines), told this newspaper that “Alitalia It goes away Coming soon. “That was in 2005. But the airline, like Augusto Monterroso’s dinosaur, is still there. More scary than ever.

Decades without profit

For the past thirty years he has made no profit. With Accumulated losses of more than 11 billion since 2000, it has absorbed more than 10 billion of public funds. In 2008, when Berlusconi was Prime Minister, an attempt was made to add Italian private entrepreneurs, but the idea failed. The last governments with the majority of the Five Star Movement have tried the impossible bail out the business. Consideration was given to bringing the state-owned railway company into the capital (state railways).

Then the participation of the Ministry of the Economy and even of Atlantia, the motorway management company of the Benetton family, was considered in an attempt to make him pay for the collapse of the Genoa bridge. No project has materialized. In bankruptcy Since 2017, the directors follow one another without pain or glory. Since then, Alitalia has guaranteed state loans of $ 1.3 billion, which the Commission is still assessing whether they are legal. If I had to return them, I will not be able.

Regarding alliances, they have been associated these months with Delta, Lufthansa, Easyjet. No one dared to take the plunge. Among other things because Alitalia, in addition to chronic management problems (its majestic offices on Diagonal have been closed for years), does not appeal to travelers. In 2019, only 7.9% of the nearly 100 million passengers who traveled to and from Italy chose this airline. Ryanair has a 23% market share.

The Italian government wants to form a new company (called ITA), with only 45 planes, of which only four for long distances and with less than 4000 workers (half of the current Alitalia) without maintenance or assistance service. ITA would keep Alitalia’s assets, but without paying for them. Cost of the operation for the taxpayer: 3,000 million euros.

However, Brussels does not see it so clearly. First of all, it would require you to halve your flight rights at Milan Linate Airport. He also hears that this company marks a break with the previous one. In other words, it is profitable. But, as the press knows these days, the Commission warned that, as proposed, the airline would not be able to generate returns and that the assets of Alitalia you have to pay them. If Commissioner Margrethe Vestager does not give the green light, Alitalia runs the risk of being grounded forever.

The Italian executive recalls that Alitalia’s losses in 2020 were relatively low compared to those of Lufthansa or Air France: around 484 million euros, but does not mention that it did not make any money for decades.

It also requires parity of treatment. “In the streets, Alitalia workers tell me that much more money has been given to Lufthansa or Air France,” said Minister of Economic Development Giancarlo Giorgetti. The problem is, what the Italian entered for the pandemic has already been spent.

By Piergiorgio M. Sandri, The Vanguard

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