Alitalia facing shut down by mid-2020?

December 22, 2019

 

Source: aerotime.aero

 

Bankrupt since 2017, Italy’s flag carrier Alitalia was promised a fresh infusion of $400 million in funds earlier in December 2019. But the lifeline could be the state’s last attempt to keep the troubled carrier afloat, media reports now indicate. If the latest grant is indeed the last one that Italy’s government makes, this means that the mid-2020 would be a crucial time for the airline’s survival: it either finds a suitable investor or closes its doors for good.

Industry Minister Stefano Patuanelli said Italy’s government would no longer provide funds to keep the ailing state’s flag carrier afloat and the latest state intervention is indeed the last one, as reported by Reuters on December 21, 2019. The airline’s future appears to depend on the outcome of an ultimatum, as Patuanelli said that either a buyer is found by mid-2020 or the carrier “would shut down”.

On December 2, 2019, the Italian Council of Ministers signed documents to grant $443 million (€400 million) loan for the airline in hopes to help it remain in the air until the summer 2020. The fresh infusion of funds would come on top of the previous state aid, reportedly already reaching €900 million. So far, the newest grant is guaranteed by the state, but not yet allocated and it has to be approved by the European Commission.

The troubled Italian airline, Alitalia, has been granted an emergency loan by the Italian government in order to continue flying. Yet what are the prospects for the carrier to move forward?

Alitalia went into special administration in May 2017, after the airline’s employees rejected another austerity plan, leading to the carrier’s bankruptcy. The Italian government initially granted a bridging loan of €300 million, followed by an additional €600 million in October 2017. As the rescue talks continue to drag on, the government has indefinitely delayed the repayment of the €900 million sum.

Since Alitalia went into administration, the Italian government has begun a so far fruitless endeavor of finding the airline an investor. The list of (rumored) suitors included 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. However, it appears that none of them are left in the game.

Various deadlines came and went within the two years since Alitalia was declared bankrupt. Allegedly burning €2 million every month, the national carrier remains alive and still kicking.

In the most recent disclosure, Alitalia reported that its passenger revenues during the first eleven months of 2019 (as of November 20, 2019) rose by 1.6% in comparison to the corresponding period in 2018. However, when compared to 2017’s results, this constitutes a rise of 8.8%.

Also in November 2019, its intercontinental sector reached twenty-fifth consecutive month of revenues increase and “continues to drive the overall growth”, according to the airline’s statement.

In December 2019, Alitalia signed codeshare agreement with Azul Brazilian Airlines, expanding its offerings to 19 destinations in Brazil. In October 2019, the airline announced expansion by launching a new direct seasonal route between Rome Leonardo Da Vinci Airport (FCO) and San Francisco (SFO), expected to commence in the summer of 2020. 

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