Rome – Italy’s troubled airline Alitalia filed for insolvency on Tuesday, after its workers rejected a tough restructuring plan, but secured a 600-million-euro (650-million-dollar) government loan to stave off immediate bankruptcy.
Alitalia has not turned a profit since 2002, and has been on the brink of collapse three times in the past 10 years. Privatized in 2008, it has since lost more than 2.5 billion euros.
A board meeting was convened straight after Alitalia’s main shareholders – Abu Dhabi carrier Etihad and Italian banks Intesa Sanpaolo and UniCredit – confirmed that, with no deal with workers on a rescue plan, they would block a 2-billion-euro recapitalization.
The board “unanimously” decided to ask for the firm to be placed under receivership, a company statement said. But despite that decision, “Alitalia’s flight schedule will continue to operate as planned,” the airline assured.
“We are not prepared to continue to invest. We therefore support the necessary decision of the Alitalia board to apply for extraordinary administration,” Etihad boss and outgoing deputy chairman of Alitalia James Hogan said in a statement.
Economic Development Minister Carlo Calenda accepted the application and named a trio of special administrators: Alitalia board member and chairman-in-waiting Luigi Gubitosi, as well as Enrico Laghi and Stefano Paleari.
Separately, the government held a cabinet meeting to approve an emergency loan, valid for six months. Calenda said it was warranted by the need to avoid grounding millions of people and causing “enormous damage” to Italy’s reputation and tourism industry.
The state-appointed administrators have a “very clear” mandate to find private rescuers for Alitalia and limit expenses for the taxpayer, Calenda said, after Prime Minister Paolo Gentiloni repeated that renationalization cannot be a solution.
“We have ruled it out from the start; we are ruling it out today,” he said.
According to a study published two years ago by Italian merchant bank Mediobanca, the repeated state bailouts Alitalia has received during the 1974-2014 period have cost the taxpayer a staggering 7.4 billion euros.
Analysts doubt that any rational investor would want to pour fresh money into the airline. While Italian media has speculated about a possible takeover bid from Lufthansa, the German company has issued denials.
Andrea Giuricin, an expert at the free-market think tank Istituto Bruno Leoni, says Alitalia’s assets are worth “practically nothing,” and recalls that a company bond it issued just two years ago has shed 90 per cent of its value.
“The idea of selling Alitalia as a package seems like wishful thinking, rather than a plan that could succeed with a reasonable degree of certainty,” Andrea Boitani, an economics professor from Milan’s Catholic university, told RAI state radio.
Alitalia employs around 12,500 personnel.
The rescue plan rejected by employees in a referendum vote that ended last week foresaw nearly 1,600 job losses and an average 8-per-cent pay cut for the remaining workforce. The package was rejected with 67 per cent voting against.
Alitalia’s staff now face tougher restructuring. But many of them can hope to find employment with rival companies, and relatively generous unemployment benefits are available for those who remain caught out by the crisis.
Experts agree that Alitalia’s main problem is a loss of business on domestic flights – its former core market – to low-cost airlines like Ryanair and high-speed train services, and a failure to make significant inroads in more lucrative long-haul routes.