Alitalia heads into bankruptcy proceedings
By Steve Creedy Tue May 2, 2017
Alitalia’s board has filed for an “extraordinary administration” as the Italian flag carrier staggers towards what could be its final days.
The move will see the Italian government provide temporary funds to keep the airline flying while administrators are appointed to decide whether to sell or liquidate it.
The administrators will have 180 days to arrive at a decision with a possible extension of 90 days, Bloomberg reported.
The Italian government has indicated it will not renationalise the carrier and major investors have no appetite to put in more money after the airline’s workers rejected a 2 billion euro restructuring deal that would have seen job losses and pay cuts.
The airline is estimated to have lost 3 billion euros since it last emerged from bankruptcy in 2009
The airline’s board said in a statement issued on Tuesday that the bankruptcy proceedings acknowledged “the serious economic financial situation of the company, of the unavailability of the shareholders to refinance and of the impossibility to find in a short period of time an alternative’’.
Alitalia’s flight schedule would continue to operate as planned, it said.
Major shareholder Etihad Airways, which owns 49 per cent of Alitalia, said it was not prepared to continue to invest in the airline without support for the restructuring. Etihad invested 1.7 billion euros in Alitalia in 2014.
Etihad Aviation Group chief executive James Hogan said the Abu Dhabi airline had done all it could to support Alitalia but it was clear the business required “fundamental and far-reaching restructuring” to survive and grow.
“Without the support of all stakeholders for that restructuring, we are not prepared to continue to invest,’ he said. “We, therefore, support the necessary decision of the Alitalia Board to apply for extraordinary administration.
“We are disappointed that despite Etihad’s significant investments in Alitalia, alongside those of the other shareholders, the airline was unable to proceed in its current form.’’
Hogan said an initial strategy developed by Alitalia at the time of Etihad’s investment and implemented from 2015 had delivered “significant improvements”.
“However, new marketplace challenges, including greater low-cost carrier competition and the impacts of terrorist events on tourism demand, meant further, deeper change was required,’’ he said.
The Gulf airline is advising its passengers with Etihad bookings on Alitalia, or vice versa, to proceed with their travel plans as normal. It said it would communicate promptly and directly with its affected guests if the situation changed.
The decision by the Alitalia workers to reject the restructuring comes as polls show most Italians are reluctant to bail out the troubled airline.
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