Italian government looking to step in and rescue long-bankrupt Alitalia

Alitalia ©AirTeamImages

In a surprise move at a time when all travel to and from Italy has been banned, the Italian government has announced it is looking to re-nationalize Alitalia, the airline which filed for bankruptcy in 2017 and which, while still operating, has been losing an estimated €2 million per month.

Since Alitalia went into administration, the Italian government is rumored to have courted investors including the state railway company Ferrovie dello Stato, infrastructure group Atlantia, European carriers EasyJet, Ryanair, Lufthansa, Wizz Air, Air France-KLM, and the U.S. legacy carrier Delta Airlines, none of which showed any interest.

Currently the carrier has two state loans outstanding which have yet to be repaid, including a €300 million bridging loan and a further loan of €600 million. However, since it went into administration, according to figures disclosed in November 2019, passenger revenues during the first eleven months of 2019 rose by 1.6% in comparison to the corresponding period in 2018. When compared to 2017’s results, this constitutes a rise of 8.8%. Its intercontinental sector reached its twenty-fifth consecutive month of revenue increase and “continues to drive the overall growth”, according to the November statement.

Italy’s AGI news agency has reported that Italy has set up a €600 million fund to aid the aviation sector during the coronavirus outbreak. In a government decree published this Monday, the government’s plan for Alitalia was outlined, though analysts have estimated that the cost of rescuing the ailing carrier would extend to approximately €600 million on its own. Concerns for Alitalia remain as it has permanently struggled to compete with fellow low-cost carriers Ryanair and easyJet, and analysts consider the Italian carrier will struggle to return to profitability as it is overstaffed for the number of flights it operates. It flew only 22 million passengers and saw its market share in Italy slip to 14 percent in 2018.

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