Sunday , November 29 2020

Alitalia, 3 billion in smoking in 10 years with private individuals. Can the state improve? | Milena Gabanelli



Here we go again: Alitalia's third redemption in 10 years! How do you lose 3 billion euros in a market, Italian, which meanwhile went from 50 million passengers in 1997 to 143.7 million in 2017?



Alitalia, how much the state put in it over the years


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  • 1997
    Market liberalization and low cost arrival
  • 2000
    Alitalia moves from the control of IRI, in liquidation, to that of the Treasury (which has no industrial expertise) and begins to be resized: it cuts the long term that is rising in the market
  • 2004
    Giancarlo Cimoli arrives (then sentenced in 2105 to 8 years and 8 months in prison for bankruptcy and market manipulation), Alitalia is worsening until the end of 2006, when the government begins to investigate the market for a privatization

The reason for so many failures

Since, in 2008, Alitalia was given to individuals, debt cleaning (Cai), the heart of failure represented by an extraordinary combination of wrong industrial plans and inability to manage costs.


What happened after the arrival of individuals


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  • 2009
    Allintegrazione with AF, Prime Minister Berlusconi prefers the entry of the brave captains (Colaninno, Benetton, Ligresti, Caltagirone, Tronchetti Provera), who enter a debt-ridden Alitalia, disposed of in public funds. The Fenice Plan, developed by Corrado Passera, goes in the opposite direction to the market: 2/3 of domestic traffic (on the eve of the completion of Alta Velocit) and medium term (1 where low-cost car competition is), 1/3 long range (additional cut). The fleet drops from 181 aircraft to 139. They are 23,000 employees and begin to cut staff and wages
  • 2015
    The Phoenix Plan ends up being a disaster and Alitalia loses money at breakneck speed. Etihad arrives, proposing a long-range fortification that he does not realize, further reduces the fleet
  • April 24, 2017
    Workers say no to the referendum proposed by the unions over the preliminary agreement with Etihad, which has presented an unlikely business plan: to increase revenue by 30 percent in a few years, landing a sixth of the fleet.
  • May 2, 2017
    Commissioners Gubitosi, Laghi, Paleari arrive

L & # 39;more serious error occurs in 2009 with the the most profitable sector, the long term. In all European countries, traditional carriers have increased and, in addition, the state has defended the flag-holders, preventing low-cost flights from using the major airports. We have done the opposite: today Italy, among the main European countries, is the one where low-cost companies have the largest market shares. To increase the destination the first of January 2015, the Etihad Arabs arrive: with 497 million euros, 49% of the company is bought. Fasten your belts, Alitalia takes off to new destinations, said the then Prime Minister Matteo Renzi. The Arabs they announce that they will focus on the long term and increase the fleet, then sell 21 aircraft, further weakening the company from 139 aircraft to 118.


Then they implement an industrial policy that, in two and a half years, instead of taking off to new horizons, forced a quick emergency landing.

Etihad: incompetent or filibusters?

Luca Cordero di Montezemolo, president of Alitalia until March 2017, said: There were no clear things in the management of Etihad. We will see. With 60 million, he buys Alitalia's 5 seats at Heathrow and rents them back to 3.7 million a year. According to an expert opinion of the current commissioners, the price according to the market, according to other experts, not. Understanding the right value is not easy, but Alitalia's price is among the lowest in recent years. The 5,000 pilots and flight attendants are sent to run 4 days in Abu Dhabi to develop the spirit of the body. Also in Abu Dhabi, the decoration of long-haul planes (which travel back and forth) is redone. All at the expense of Alitalia. The old computer system is good, but the Arabs impose their own Saber: it costs 57 million euros, plus another 35 per year for reserve rights for 10 years. An unsatisfactory program, Commissioner Luigi Gubitosi. The heavy maintenance is dismantled and entrusted to the Israeli Bedek, so the parts to be revised should be sent to Tel Aviv. Etihad signs contracts to cover changes in fuel prices at prices above the market average, although oil is steadily declining from 2014 to 2016, while oil varies between $ 30 and $ 45 per barrel, Alitalia pays 65. Costs 20% higher are fleet rents: additional costs reach 90 million per year. Finally, emiratina closes Alitalia Cargo (which performs well) and absorbs the business with Etihad Cargo. Then there is the famous Airbus 340 for the presidency of the Council, which the Ministry of Defense leases from Etihad through Alitalia for 144 million euros in eight years. A four engine out of production since 2011 because it consumed a lot: the last one had been sold for 27 million euros (source: Air Transport World). In two and a half years the company lost about one billion euros. On its management investigates the judiciary: the hypothesis of fraudulent bankruptcy.

O May 2, 2017 Commissioners arrive Luigi Gubitosi, Stefano Paleari and Enrico Laghi (in the air of a conflict of interests because he was present at Alitalia for years as president of Midco, the spa through which Cai controlled the company with 51%). The dramatic situation: Alitalia has already sold 4.5 million tickets worth 530 million euros, but in the box there are only 83. Oxygen comes again from the state, with a bridge loan of 900 million. The mission of the clear commissioners: a year and a half of time to heal the company and then put it on the market for the highest bid. Leasing contracts are renegotiated (-23% in September 2018 compared to January 2017), the operator has changed (-10%), commercial costs reduced by 8-14% and the number of managers (from 64 to 50) , savings of 8 million euros); revitalized the cargo sector (+ 9/11%) and reported heavy maintenance (-10%). After a little more than a year, sales of digitized tickets (+ 19%) and flight hours (+ 9%) increased, while the long-distance segment, by far the most profitable, increased by 7.3%. The handling is optimized (-30% of the luggage lost in 2018), and Alitalia wins the second place for punctuality reaching the European level. Today revenues increased 7% and losses fell about 80%.


Is it important to have a banner company?

The time expired on October 31. There are now two options: sell or raise. All the operators interested in the purchase requested heavy cuts in the personnel, even if the cost of the employees was in line with the one of the other companies (20% of the total).


To reviveinstead 2 billion euros are needed. The government has put Ferrovie on the field, but a technical partner is needed. The applicants are Delta, Easyjet and China Airlines, while Lufthansa notes. On December 15, the loan of 900 million euros (plus 10% interest) also expires, but there are 700 in cash and an extension is expected. Question: After experiencing all sorts of disastrous management, our old flagship company must recover? If you look at the market trend, the answer is. According to IATA, over the next 20 years, passengers in the world will double from the current 4.3 billion and in 2035, in Italy, will grow 30%.


What the market instead can not provide a dominant class capable of making a serious business plan and protection rules, compared to the competition, not always fiscally correct, low cost. And we know this the difference between a raise or another bankruptcy goes from the hands of the manager to whom you hand over the keys. This is the real big theme.

November 4, 2018 | 23:10

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