Alitalia told to present new business plan to Italian government

Italian national carrier Alitalia has been asked to present the Italian government with a detailed business plan agreed with creditors, banks and shareholders within the next few weeks as it again faces significant financial losses.

A meeting in Rome Jan. 9 saw senior Alitalia executives—including CEO Cramer Ball, Etihad Group chairman James Hogan and representatives of three Italian banks who are shareholders or backers of the airline—meet with Economic Development Minister Carlo Calenda and Transport Minister Graziano Delrio.

Abu Dhabi-based Etihad Airways, which is a 49% shareholder in the Italian flag carrier, stepped in to bail out the loss-making Italian carrier in 2014. Alitalia is nearing the conclusion of a three-year turnaround plan that was supposed to return it to profit this year, but is reportedly still losing money heavily.

The new business plan was approved by the airline’s board Dec. 22, with the airline spelling out the seriousness of the situation in a statement that said short-term funding had been agreed upon at a separate shareholders’ meeting.

This was “to allow the airline’s management team to begin negotiations in the next 60 days with key stakeholders—lessors, suppliers, distribution companies and trade unions—to seek their commitments to deep cost reduction measures to secure long-term support from the shareholders and the financial institutions with the aim to secure sustainability for the airline.”

Ball went so far as to say: “The next two months are critical for Alitalia. It is vitally important that the airline’s workforce and major stakeholders, such as corporate partners, suppliers and unions, embrace and accept the radical changes we need in order to gain the next round of significant funding from our shareholders, which will be crucial for our future.”

An Alitalia spokesman declined Jan. 10 to comment further on the matter.

According to the board, “The main focus of future activities will be to change our business model by:

developing further the long-haul flight network;

reworking the narrow-body business;

reducing costs and improving productivity to match competitors;

re-evaluating joint venture agreements;

deepening existing airline partnerships and look to add new commercial relationships;

leveraging recent large investments in technology to compete, and also drive additional revenue;

reducing manpower numbers to create the ‘right size, right shape’ for the business.

“The ‘right size and right shape’ program will ensure that the organization can operate efficiently in a highly competitive environment, while minimizing redundancies and maximizing productivity.

“No final decisions on staff reductions have yet been taken and the management team will now begin consultation with employees and their trade union representatives.”

Ball added: “We are committed to work positively with the unions and reach consensus on a new collective labor agreement. Their backing on the implementation of the next phase of the business plan is vital.

We have achieved great progress in the last two years but the commercial aviation market is brutally unforgiving so we need to go further with our program of change. We need a business that is the right size, the right shape and with the right productivity and cost base. If we can deliver those, Alitalia will succeed.”

(Alan Dron - ATWOnline News)