Alitalia Airlines After Bankruptcy
With its headquarters in Rome, the capital of Italy, the one-time national airlines of Italy, Alitalia, is still the nineteenth largest airline in the world. Alitalia’s hub is Rome’s Leonardo da Vinci-Fiumicino Airport, where it maintains three runways to accommodate its many international flights. The flagship carrier 24 destinations in Italy and 66 more around the world, all of its top 10 flights originating in Rome. Frequent fliers can accumulate points with MileMiglia, qualifying them for free travel on Alitalia or its Sky Team partners, including Air France, Northwest, Delta, Continental (through mid-2009), Aeroflot, Czech Airlines, Korean Airlines, and more.
Alitalia’s first domestic flight was in 1946, from Turin to Catania and then to Rome. Alitalia’s maiden international flight took place in 1947 with a flight from Milan to South American. Its present fleet consists primarily of Airbus and Boeing aircraft, as the company makes strategic changes to expand its presence in the international market.
Like many other airlines, Alitalia has faced financial challenges almost continuously since its inception, with just one profitable year, 1998. Its most serious financial issues were due to problems with labor issues and government interference. The Italian national government stopped subsidies in 2006, and the airline declared bankruptcy in 2008. The airline then became a private company when Air France-KLM acquired a 25 per cent stake in the airline from the Italian government.
The newly privatized Alitalia then merged with Air One under a corporate consortium called Compagnia Aerea Italiana (CAI), which finalized its acquisition of the two airlines in late 2008. The new Air One operates frequent flights to 36 destinations in Europe and also to North America, flying from Rome, Milan, and Turin.
Italian Prime Minister Silvio Berlusconi called for the creation of the consortium, which consists of major Italian entrepreneurs and financial institutions. Under the terms of the agreement, the consortium assumes responsibility for Alitalia’s debts. The consortium was very controversial, with opponents claiming the airline’s sale was subsidized by taxpayers. The deal was worth one billion euros. The new owners have a five year plan they say will restore the new airline to profitability in 2010. Over 12,000 Alitalia workers were kept in the merger, while another 3,250 jobs were eliminated.
Alitalia officials anticipate that the 25 per cent minority stake held by Air France-KLM will help the new company to achieve its goals of profitability and expanded presence in the international market. The new partnership is a good deal for the flying public, as the chances to earn and spend frequent flier miles through MileMiglia are greatly expanded.
The Pope flies on a chartered Alitalia Airlines jet nicknamed “Shepherd One.” The changes in Alitalia’s ownership are not expected to impact that arrangement.
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