Alitalia saved by the Government and reborn as ITA Airways

[Flanker2]

me109, regi is just saying that they will get more money once the current money is gone. The organisation and the structure... is part of the reason why.

Until recently when they miraculously turned a quarterly profit, I never believed in the current AZ.
The problem is their hub strategy, moving everything to FCO was a big mistake, because almost every flight has to travel 500 extra kilometers for nothing.
That being said, I don't see MXP as a much better alternative, it's just too far from Milan. MXP is to Milan what LGG is to Brussels.

If we were to change the scenario to Germany, it would be the same as trying to choose between Berlin and Hahn.

I can see a workable plan for a very succesful Italian carrier, but Berlusconi can send me a attach case full of money and some of his escorts for the weekend before I lay out those plans.

[tsv]

me109, regi is just saying that they will get more money once the current money is gone. The organisation and the structure... is part of the reason why.

Until recently when they miraculously turned a quarterly profit, I never believed in the current AZ.
The problem is their hub strategy, moving everything to FCO was a big mistake, because almost every flight has to travel 500 extra kilometers for nothing.
That being said, I don't see MXP as a much better alternative, it's just too far from Milan. MXP is to Milan what LGG is to Brussels.

Their Hub strategy may be unhelpful but I think they have more fundamental problems than that.

To be successful a Business must firstly have a market and secondly be able to offer a product to that market at a price that will be accepted by enough Customers for the Business to Prosper.

Well they do have a Market. There are enough People in Rome, Milan and various other Italian Cities that regularly fly to support some flights.

The problem therefore is their product and the cost of supplying their product. To be more successful than Competitors a Business must either offer a superior Product, so they can charge a premium for it, and/or produce their product at a lower cost so they have a greater profit margin.

I would suggest Alitalia does neither. They do not have the extensive Network and flight frequencies of Competitors such as Lufthansa or Emirates and by all reports their Customer Service standards are considerably worse. Meanwhile their costs are perpetually high because of the strength of Italian Unions.

So basically they are incapable of offering an equivalent product to their major Competitors or a Cheaper Product. In an efficient market this would mean certain demise.

But Flag Carriers do not operate in a completely efficient market. There are numerous reasons (some of them valid) why a Country wants to preserve indigenous Airlines. So AZ's only stratey for survival is to hope they are perpetually rescued for Political reasons. It has worked until now but I can't believe that even Air France would be silly enough to throw more chips on the table. If they are rescued again it will probably have to be done by the Italian Tax Payer. A quick death would be merciful but probably still unlikely.

[ticketbuyer]

Italian culture is a marketing dream; food, wine, coffee, style, flair, hospitality, love of life, etc. and many companies around the world have used it to great success.
Alas Alitalia is not one of them

[regi]

Italian culture is a marketing dream; food, wine, coffee, style, flair, hospitality, love of life, etc. and many companies around the world have used it to great success.
Alas Alitalia is not one of them

Great cars - which don't drive.

Look, they should have learned some lessons from other examples. Let us be honnest : Sabena had no really good reputation either. They finally pulled the plug, and SN Brussels Airlines was born. The name change was at least a sign that they would do their best to be better.
If those AZ managers are so stubborn to stick with a bad reputaton, so be it. Flush it and forget it.

[sn26567]

Two new pieces of information:

1. The Italian government has asked the national railway company Ferrovie dello Stato to invest in Alitalia in order to rescue the company. The troubled airline might have to file for bankruptcy if no deal on a proposed capital increase is reached in a couple of days.

2. The national oil company ENI has threatened to stop supplying fuel to Alitalia by Saturday if its bills are not paid.

Things start really to look very bad...

[brusselsairlinesfan]

Two new pieces of information:

1. The Italian government has asked the national railway company Ferrovie dello Stato to invest in Alitalia in order to rescue the company. The troubled airline might have to file for bankruptcy if no deal on a proposed capital increase is reached in a couple of days.

2. The national oil company ENI has threatened to stop supplying fuel to Alitalia by Saturday if its bills are not paid.

Things start really to look very bad...

no good sign indeed

[Flanker2]

Well I think that it would be a shame to let AZ go down after so much effort to keep it alive.
The Italian airline industry needs a large airline.

-AZ is in the toilet and this time it's taking Air One along with it.
-After the merger with Air Italy, Meridiana is still going from bad to worse, a lot of problems. The Sardinian authorities and Aga Khan are keeping it alive with capital increase after capital increase
-Alpi Eagles went belly-up
-Windjet went belly up
-Itali Airlines was closed
-Air Dolomiti is being down-sized

What is left?

I think that the right course of action would be to invest big money together with the taxpayer in order to fix all the problems through a large restructuring. They did that once already with the merger with Air One, but it's not working, because AZ is still making the same mistakes as all the other legacy airlines: not addressing the customer's needs, not on the product front and not on the pricing front.
They need to adapt, not just get money to burn it uselessly.

Italy needs to rethink their whole aviation industry. A restart a la SN Brussels is an expensive story and there will be alot of lost jobs. It's better to use the current AZ structure and do a huge restructuring, including the brand. AZ is still a strong brand domestically so there it should be kept, but for the rest, a good rebranding is necessary. By that, I don't mean "AZ Roman Airlines".

Actually Italy is a very easy market. A decently managed Italian carrier can make loads of money if they use their minds.

[crlhub]

Deadline to avoid bankruptcy till thursday:

Solution 'à la sn' in sight with a state temporary 6 months rescue help':

Faute de chevalier blanc de dernière minute, Air France KLM mise sur l’octroi d’une aide d’Etat transitoire (« rescue aid »), remboursable dans un délai de six mois pour renflouer la compagnie et éviter une faillite à la Swissair ou à la Sabena.

http://www.lesechos.fr/entreprises-sect ... 615164.php

[cathay belgium]

Hi,
A la SN, so we loose our bookings for next year ?
Better booked Ryanair...
CXB

[regi]

Hi,
A la SN, so we loose our bookings for next year ?
Better booked Ryanair...
CXB

Basic difference is that at Ryanair, they understand the basic economics of a company. I keep on repeating myself again and again for those who have missed it:
the sole reason for the existance of a company is to make profit. Not to make people happy, give free food, provide a job, provide pension plans, whatever. So Ryanair succeeds in that. Good for them.

If a company fails to fulfill this basic need to make profit, it has no more reason to exist. It has failed its duty. Simple.
Pull the plug. The demand for air travel will be fulfilled by other carriers, e.g. Ryanair, or others. The employees of AZ can go work for Ryanair, and they should not be afraid to work for an employer who does not fulfils its duty ( make profit ). I assume that some kind of employees will not have to send their resume to Ryanair, especially those managers who were unable to make a sustainable profit.

[regi]

Actually Italy is a very easy market. A decently managed Italian carrier can make loads of money if they use their minds.

Is there any indication to sustain this remark? I just think it is hopeless.

[Flanker2]

Well Regi, Italy has a great industry and great tourism, on top of a great diaspora and a geographical challenge which comes with subsidies paid by the governments called "continuita territoriale", territorial continuity.
Northern Italy is also central enough to make part of the West European longhaul connecting market.

It's so easy to set up a profitable carrier, all you need to do is to use your mind and have people with knowledge of economics dealing with the business rather than political appointments.
Like they say, AZ's top managers can only come from 3 Italian sources: Trenitalia, Telecom Italia or Enel, which are more or less like NMBS/SNCB, Belgacom and Electrabel if you relate them to Belgium.

Forget the hub in FCO. More than 80% of AZ's routes are to/from the North towards the rest of Europe and overfly the Milan area. That's a waste of 500 kilometers on each sector. Most people don't need to go all the way to Rome.
That being said, MXP is not a solution. The thing is closer to Monaco than it is to Milan.

Italy needs a new mega hub airport, and it needs to be at the doors of Milan.
That's the first requirement.

The airline needs to provide great value.
That's the second requirement.

The airline needs to have an extensive longhaul network, comparable to AF and LH.
That's the third requirement.

[cathay belgium]

Hi,
rumours are that Poste Italiana , italian post, rescued alitalia from a demise for a while..
Mr Letta is working on this..
So kerosine will be flowing on saturday ...
KL-AF interference on routes and strategy is hereby withhold...
the story continues...

CXB

[Inquirer]

Indeed. The italian post wants to step in and buy shares in Alitalia to prevent it from running out of liquidity as soon as this afternoon. The postal group itself would contribute some m75€, but other shareholders like Air France are expected to contribute too to make the plan legal.

http://www.tijd.be/nieuws/politiek_econ ... 2-3465.art

[regi]

They found the Lost Treassure:
http://postandparcel.info/54814/news/co ... -for-2012/

Good that the Post made a profit. The origin of those profits is a bit different than in another businessmodel. But OK, profit is profit.
Question is now what this financial input will mean:

• a total revamp of AZ towards a sound company?
  a temporary but useless money drain?
  the start of the decline of the Post as well, being contaminated by AZ

see you next month

[cathay belgium]

Hi,

Alitalia is saved,by the bell...
Investers and new loans are given..
Poor Regi, his nightmare is not gone..
But the story will continue for sure..
Guess I won't book AZ for future bookings, too risky
Pfff... Tought it was the time to let go this time..

CXB

So we see again, logic and rational toughts aren't here to stay Italy

[sn26567]

Alitalia is saved,by the bell...
Investers and new loans are given.

Alitalia rescued after financing deal agreed

Alitalia has avoided bankruptcy after the airline's shareholders agreed to raise fresh funds.

The board of Alitalia agreed to a 500 million euros rescue package.

Shareholders will contribute 300 million euros in capital increase by stock options, including 75 million euros from the Italian postal service (Poste Italiane), and the rest will be financed by banks as a loan.

The government says there will be an overhaul of the business.

Air France KLM remains the airline's biggest shareholder with a 25% stake, but has not decided whether and how it will participate in the rescue.

Sources: BBC and ATW online

[me109]

This is a never ending story.
How long will it take before they need money again.
Everyone know the reason why AZ is making loss.
Their structure and organization makes them simply "burn" the money.

[RoMax]

OMG
In this situation, I believe it would be very stupid of AF-KL to keep investing in this airline. Italy only wants the Dutch-French money, but nothing more, Alitalia just continues to be the sluggish failing airline of which Italy is too proud to give it up.

[sn26567]

Rival airline attacks Alitalia rescue as illegal

A leading European airline group, International Airlines Group (IAG), which owns British Airways and Spain's Iberia, denounced Italian plans to rescue Alitalia as illegal on Monday and urged the European Commission to intervene over the Italian government's attempts to stitch together a bailout for Alitalia. IAG said the rescue breaks European Union rules.

In Brussels, the Commission said it expected Italian authorities to inform it of the plan.

All shareholders, including Air France KLM, have 30 days to decide how much money to sink into the issue of new shares. They remain under no obligation to take part in the cash call.

More details from Reuters