Strategic Meetings Summit London, 26 September,
September 29 2022, Kimpton Fitzroy London
Friday 30 September 2022, JW Marriott Grosvenor
Alitalia has accepted a bid from Air France-KLM in a deal that sees the ailing carrier purchased for just ”138m (”106m)
Air France-KLM will also inject ”1bn ” to be launched immediately after the closing of the offer ” largely towards funding the commercial re-launch of Alitalia, and the group proposes to acquire Alitalia”s convertible bonds for ”608m.
After a tortuous process lasting several years, the Italian flag carrier finally succumbed to Air France”s overtures - but not before other operators such as Aeroflot ran the rule over the airline, which was losing a staggering ”1m per day.
The deal may well attract fierce opposition from Italian unions, which have already rattled their sabres, as plans to scale down operations at Milan Malpensa in favour of Rome were previously floated in a bid to stem losses.
Air France has consistently referred to settling the union situation as a precursor to any eventual takeover, while former Prime Minister Silvio Berlusconi, who may well emerge victorious in upcoming elections, has played the nationalist card by insisting that Alitalia remain in Italian hands.
But in a startlingly frank assessment of its position, the Alitalia board pulled no punches when unanimously accepting the bid from Paris. In a 16-page statement, it noted:
”Alitalia is going through a highly critical situation, causing a progressive erosion of its liquidity position.
The ”Plan for Survival/Transition” approved in 2007, already included actions of discontinuity through the new network design, the suspension of flights and the subsequent downsizing of the fleet.”
In a move to placate union unease, the Alitalia board also insisted that Air France-KLM would retain the Italian brand name, trademark, logo and livery, much in the same way that the Dutch carrier has kept its identity in Holland.
However, the board also fired a very clear warning shot across union bows, referring quite specifically in its statement to ”effectiveness conditions,” that set out just what it expects in return for the cash injection.
”There are other relevant effectiveness conditions, [namely that] finalisation of an agreement with the trade unions, for Alitalia and Alitalia Servizi”s employees, as their full co-operation is key to the relaunch of the company.”
Italian news sources are also suggesting that a rival bid from fellow Italian carrier Air One, would not proceed.
Air One had previously issued a highly emotive call to arms saying: ”We are ready to defend the future of national air transport together with the other entrepreneurial communities all over the country.”
In its statement, the Alitalia board reveals that it will concentrate its aim on Rome Fiumicino as its main hub in tandem with Paris and Amsterdam, while appearing to demote Milan”s importance, referring to the northern business city as a ”key gateway,” focusing on point-to-point operations.
The board also fully expects short term traffic to drop, although this ought to be matched by a concomitant rise in load factor of 1.5 points. It also appears likely that the fleet will be drastically pruned - especially MD80 and regional aircraft - as newer generation aircraft are integrated into the network.
Total phase out of the MD80 is expected by 2020 and of the Boeing 767 by 2016.