On Tuesday Italy's national carrier Alitalia filed for its second bankruptcy in less than 9 years, after the Alitalia board voted to ask the Italian ministry of economic development to put the loss-making flag carrier, partly owned by UAE's Etihad, into special administration, after workers rejected its latest rescue plan designed to unlock much-needed financing. That will now not happen.
Alitalia staff last week voted - by a clear majority - against a radical restructuring plan that would cut both jobs and salary packages, ironically many more workers will now not qualify for compensation in addition to job cuts.
Following administration, Alitalia will see the Rome government appoint commissioners, who will independently assess whether the airline can continue to trade - either as a standalone company or through a partial or total sale - or the doomwatch scenario that Alitalia should perish and be wound up. The Pope won't be at all
pleased as he routinely flied between his home location and
James Hogan, the CEO of Etihad Airways, speaking to the Reuters news agency which acquired part of the share capital of Alitalia during the 2014 restructuring, Hogan said the Italian airline required "fundamental and far-reaching restructuring to survive and grow in future".
"Without the support of all stakeholders for that restructuring, we are not prepared to continue to invest," he said in a statement.
Meanwhile, the carrier is losing about €1 million ($1.1 million) a day and without government intervention should run out of cash by the middle of May. The government has already guaranteed a short-term bridging loan of up to 400 million euros as operating capital through the bankruptcy process. Rival airlines including Lufthansa and Norwegian Air have shown little interest in buying Alitalia and creditors have refused to offer finance, effectively putting greater pressure on the Italian Government to find a way to save the flag carrier.
The government has ruled out renationalising Alitalia, an airline that was once a symbol of Italy's post-war economic boom but is now struggling to compete at home against low-cost carriers Ryanair and EasyJet.
Outraged at repeated bailouts that have cost Italian taxpayers more than 7 billion euros during the last decade, many Italians are urging the government to resist the political temptation to rush to its rescue again.
With a general election due by May 2018, few Italians believe the ruling Democratic Party (PD) will stand by and watch Alitalia crash and its 12,500 workers lose their jobs.
A worst-case scenario was presented by Italy's Economic Development Minister, who on Sunday said that a sudden collapse of the loss-making national carrier "would be a great shock for Italy's economy."
Rome has given the crisis-hit airline a short-term lifeline, a bridge loan of up to €400 million to see it through a process whereby an administrator will decide if it can be sold as a going concern or should be liquidated.
Rival airlines have shown little interest in buying Alitalia and in any case creditors have refused to lend more money after workers last Monday rejected rescue plans that would have reduced pay and cut 1,700 jobs.
It is unclear how yet another "shock" to Italy's GDP would reverberate across Europe, although even without this adverse development, Italy's unemployment rose from 11.5% to 11.7% in March according to government data released earlier. It also flags up how European finances are generally in the melting pot and likely to nosedive as the UK pulls out.....perhaps this brexit won't be so hard after all?
JULIAN BRAY +44(0)1733 345581, Journalist & Broadcaster, Aviation Security & Airline Operations Analyst/expert, www.freelancedirectory.org?name=Julian.Bray.aviation.comment Travel / Maritime & Cruise Industry, NUJ, EQUITY, LIVE ISDN LINK, Broadcast ISDN COOBE ++44 (0)1733 345020 e&oe Old faithful NOKIA: 07944 217476 www.aviationcomment.com