In the past hours the italian government pushed out a packet of measures to support the economy in this crisis spell. As for every country in the world Covid-19 putting under a great amount of stress the Italian economy. Therefore these measures should help lessen the blow of this crisis.
At a first glance it seems that one of the beneficiaries of this packet is going to be Alitalia. The Italian national airline’s financial status has been far from healthy over the past years. Therefore without government help the airline is sure not to make it through the year.
Is It a State Take Over?
It seems that Italy’s government considers its national carrier a strategic asset for its economy. Which brought them to approve a 600 Million Euro investment in the airline. But it doesn’t look like it is the case of a simple loan, it’s looking more like a government takeover.
Alitalia’s Recent History
The airline had been state owned up to 2006 when a group of entrepreneurs bought out the airline. However things didn’t go all that smoothly for the Italian airline. Operational costs and staff costs kept on crippling Alitalia‘s finances. This was the case for for all the years of the CAI (the company formed by the entrepreneurs) and the Etihad joint management spell.
Etihad eventually decided to reduce significantly its efforts in the airline because the employees rejected the arab airline’s business plan. The new business plan aimed to restructure the airline starting from its workforce. Thousand of of employees were to lose their job. Which as you can imagine wasn’t very popular with the workers.
Thereafter the airline was a defacto owned airline. The Italian government has been putting money into the airline to maintain operations while they were working to find a buyer. Many attempts fell through, which meant that the airline was still didn’t have a buyer as Covid-19 started devastating the air travel industry.
And What Now?
Rumours have it that Alitalia will be once again a state owned airline. The Italian government will probably create a new-co that will take over the national airline. This makes of Alitalia one of the parties which gains the most from this situation.
Up to a few weeks ago, it looked more and more likely that the government was going to sell Alitalia‘s various divisions singularly. Right now the possibility that the airline will continue to exist almost with the same structure it has now is on the table.
Whenever the Covid-19 crisis will finish the air travel industry scenery might look very different compared to before. Only time will tell if there will be space for this new version of Alitalia. However one issue will not just magically disappear, the huge workforce numbers.
Will Alitalia Ever Be Profitable?
If Alitalia aims to be profitable at any time in the future there is still the need to reduce the workforce and cut unneccessary expenditures. This is an operation which isn’t simple for any company, and certainly isn’t for a government that needs to win over votes. I must be honest, I am not very optimistic of this operation.
This is something that feels a lot like a deja-vu and if the Italian government doesn’t take strong and decisive action they’re only postponing an inevitable ending.