Travel On the verge of bankruptcy, the airline Alitalia will be nationalized
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Rome wants to nationalize Alitalia, hard hit by the impact of the coronavirus epidemic and on the brink bankruptcy.
At the edge of the precipice due to the fallout of thepandemic on the air transport sector, the Italian flagship in difficulty Alitalia will be nationalized. The Council of Ministers "plans the constitution of a new company entirely controlled by the Ministry of Economy and Finance, or controlled by a company with majority public participation, even indirect", specifies a press release published on the night of Monday at Tuesday. The government does not specify the deadlines or other more concrete terms of this project to nationalize Alitalia. From airlines are hard hit, like , or , which could experience as its Italian counterpart.
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According to media reports, Rome has planned a global envelope of 600 million euros for the entire national aviation sector, in which Alitalia represents the lion's share. "This is not an easy situation, this experience (of the coronavirus, editor's note) reinforced me in the idea that a national company is strategic for our country", declared on Tuesday the Minister of Transport Paola De Micheli to the Rainews24 television channel. A new call for expressions of interest to buy Alitalia had been published less than two weeks ago, on March 5, and interested companies or funds had until March 18 to make themselves known, according to a document published on the site. the company.
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Alitalia has accumulated losses for years and had to be placed under the supervision of the administration in 2017 following the rejection by employees a restructuring plan providing for 1,700 job cuts out of 11,000. Rome has been looking for one or more buyers, without success.
The Italian public group of railways, Ferrovie dello Stato (FS), which tried for a time to constitute a consortium to save Alitalia, announced in early January that it had thrown in the towel. Contacts were made with the American Delta, the German Lufthansa and the Italian manager of motorways and airports Atlantia (family of Luciano Benetton). But Lufthansa had indicated in January that it did not want to invest for the moment in Alitalia, stressing that the latter needed a deep restructuring. Delta, for its part, said it was ready to invest 100 million euros and take 10% of the capital.
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Alitalia, faced with extremely fierce competition from low-cost companies, cannot compete with other traditional companies either for lack of sufficient size, while a large Concentration movement has taken place in recent years. It loses around 300 million euros per year. "I hope that the bottomless pit that Alitalia represents will no longer be fed forever," commented for AFP Carlo Maria Pinardi, professor at the Milanese University of Bocconi.
"The only chance for the company would be to add itself to an" important air "group but this requires a deep restructuring, which the political power does not intend to do" because that always involves dismissals politically difficult to manage, he added. The former national airline thus transported only 22 million passengers in 2018, compared to 91 million for Easyjet, 142 million for Ryanair and some 180 for Lufthansa and Delta Airlines. In Italy, its market share has leveled off at 14%, far behind Ryanair's 25%.
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At the end of February, the European Commission announced the opening of an in-depth investigation into a 400 million euro loan granted by Italy to Alitalia, to determine whether this aid complies with the competition rules. At the end of 2019, the Italian authorities announced that they would grant a new loan of 400 million euros to Alitalia to facilitate the rationalization of the company in order to try to sell its assets.
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Editor’s note: At TPG, our top priority is providing our readers with the information needed to make educated decisions about travel and rewards-earning strategy. This is not the best time to travel, domestically or internationally, as airlines have cut major parts of their route networks. But we are sharing this information to provide value for …As the coronavirus pandemic continues to drag on, airlines that are unable to secure financial assistance from their local governments are finding themselves in increasingly tough spots. Now the spotlight is on Colombian carrier Avianca, which filed for Chapter 11 bankruptcy protection in New York on May 10.