Sheesh: Alitalia Gets Another Loan From The Italian Government

This year two of Etihad’s big investments — airberlin and Alitalia — are falling apart.

Airberlin’s collapse was incredibly fast. The airline filed for insolvency in mid-August, and will operate their last flight before the end of the month. That’s just over two months from insolvency to liquidation. The German government doesn’t play games, it seems.

Alitalia has been a different story, though. Earlier in the year the airline tried to restructure in order to survive, but when employees voted against pay cuts and layoffs, the airline had no choice but to file for bankruptcy. The Italian government said they wouldn’t bail out Alitalia yet again, aside from a six month bridging loan while they try to find a buyer for the airline.

Well, Alitalia has just about run out of money, their six month period is over, and you want to guess what’s happening? Yep, the government is giving the airline yet another loan. Per thelocal.it, the Italian government will give Alitalia a further 300 million EUR loan, and is extending the deadline for finding Alitalia a buyer until April 30, 2018:

Struggling Italian carrier Alitalia received a boost on Friday when Rome said it would add €300 million ($355 million) to a bridge loan package and extend its deadline for finding a buyer.

“The deadline for the procedure of ceding assets belonging to Alitalia and other societies of the group … has been extended to April 30, 2018,” the government said in a statement.

In May, Rome said it would provide a €600 million loan to keep the carrier’s planes in the air for around six months, staving off liquidation of the flagship airline.

Originally Ryanair expressed interest in buying parts of Alitalia, but they’ve withdrawn interest, given the current issues they’re facing as an airline.

So Alitalia is left more-or-less without a buyer, and is getting a further loan from the government.

I hate to say it, but I almost don’t blame Alitalia’s employees for voting against pay cuts and layoffs, since it seems like Italy just won’t let the airline die.

Comments

  1. You guys joke about Italy propping up Alitalia, but why not? It’s about preserving jobs and a symbol of the country.

    Better for government to waste money on an airline than do what the USA does and waste money on bombs and weapons…

  2. Actually alitalia instead of cancelling flights it’s adding new routes and new planes. The new administration is doing a great job and they are cutting costs in all directions. Hopefully alitalia will find a good investor and will make it a great company as it was before!

  3. Hear hear @Anthony you right. If you ask me, Alitalia’s problems are those that can easily be mitigated or counteracted, it just that nobody’s doing them.

  4. @Anthony – mixed feelings about your remark. On the one hand, it can be argued the US bankruptcy laws allow (or at least used to, they were tightened up, in part because of United’s blatant abuse of them last time) nonviable businesses to abuse vendors and creditors, dump pension liabilities, etc. in a way that, practically, isn’t that different from government handouts. (And let’s be realistic, that’s what this, if anyone ever thinks this “loan” will ever be repaid if Alitalia somehow survives is not thinking straight.)

    On the other hand, the very fact that this “loan” is so unlikely to be repaid means the Italian government is effectively breaking EU regulations on state aid. There are some forms of state aid that are permitted, such as the bridge loan the German government gave Air Berlin, positioning them to begin an orderly shutdown and with a good chance of being repaid from the asset liquidation.

    The seemingly never-ending flow of support from the Italian government (and Etihad) just keeps this failed business flying, harming other airlines. It’s better to let it finally fail.

  5. @antony. You are one of those Russian bot? Why don’t you speak you native Russian? Guys, please don’t waste your time on this. Bots usually don’t care about responses. Russian bots exists only to make people jump at each other throats.

  6. Bankruptcy is handouts for the whites. Welfare is handouts for the non-whites.
    Americans are racist assholes. No wonder they think bankruptcy is essential for capitalism while welfare is bad.

  7. @Lucky the article is a bit incomplete, while they may be getting some
    More money, the €600M bridge loan hasn’t been touched thanks to the good performing summer with full planes, but it’s in anticipation of the slower fall/winter season. While the EU might not like the loans, they wouldn’t want another takeover from Lufthansa which is slowly extending its arm across Europe…

  8. TBH as a passenger I couldn’t be happier—I have a ticket with them two months later and now my only hope would be South African and Kenya still in operation as I have flights with them next month.

  9. I love your blog Luckily and read it religiously but I have to say you’re almost wishing Alitalia away. I flew them earlier this year from Seoul onto Nice via Rome in J class. The FAs were incredibly charming and the food exceptional. Even playing Volare as the background music is what a national carrier is all about: cultural connection. The ME3 et al lack this in an era of same old same old. Is Alitalia a financial mess? Most certainly. But is it the very essence of Italy, right or wrong? Most definitely. It is a carrier steeped in history, and although it doesn’t fly here to Australia anymore, it carries with it a lot of passion and flavour and I for one think Europe would be less European if Alitalia were to fold. Viva Alitalia!

  10. Alitalia is NOT the “very essence of Italy”. That point is so absurd it’s not even worth discussing…

  11. Alitalia features genuine Italian food, FAs with attitude, prone to strikes, historically represented Italian fashion houses in its uniforms, relies on government support and has a history of being the Pope’s airline. In Australia’s case, many Italian migrants came here on Alitalia metal. That Callum, is what essence is about, whether you want to discuss it or not. (BTW I’m not Italian) Ciao for now amico…..

  12. @Endre,

    If only I was a Russian bot, I could be riding the beautiful Moscow metro. Unfortunately, I’m writing this from an overpriced studio in squalid New York City.

    Sorry if attacking the military-industrial complex bothers you.

    Ciao bello!

  13. Compared to how the Brits handled the Monarch collapse, then yes the German government does play games. Games intended to strengthen Lufthansa.

    Seems Merkel is working hard on deutschland deutschland über alles version 2.0. At least in the air, for now.

    This is not an excuse for the Italians that are probably breaking the rules even more.

  14. I’m confused. Germany provides never-ending funding for deadbeats like Greece and Italy and immigrants by the boatful but when it comes to the only competition to Lufthansa they tell them to go to hell? If I was German I’d be pissed. But I’m not German so I don’t care how Angela spends her citizens money.

  15. @Debit I’ll believe most Americans are no longer racist when we elect a Black President.

    Oh, wait….

  16. @Anthony: If you have the money, sure. But the Italians don’t have $1bn lying around. This is a desperate attempt to convince voters. I think you can count the financial years in which AZ has made a profit over the course of its operations on two hands. It has a cash burn rate challenging those of early venture capitalism company. The main difference being, that those companies either succeed or go bust within a couple of years…

  17. It makes sense the government keeps Alitalia flying for a bit longer, with all of the unrest in the market due to the collapse of Air Berlin and Monarch now is NOT a good time to sell.

  18. Sorry but you just don’t get it: Alitalia is something that the country can’t do without. Interrupting all the national connections would do a very big damage to the economy. Air Berlin is *not* Germany’s may airline, and also you must consider that Italy has got two major islands (plus some minor ones) which would pay a very high price for being left with only a few low cost carriers to connect them to the mainland. Also, Alitalia has got its assets: its planes are rather new, Business class was refurbished recently, lounges were refurbished recently, and lots of high yield routes (JFK, ORD, GIG, GRU, LAX….) are still there. It means there are good chances to sell the airline and preserve its identity and most of its employees. But if you let the airline collapse, someone else will step in for the routes, and there will be nothing left to sell. Alitalia is not Air Berlin (not a main national carrier), is not Swissair and is not Sabena (both national carriers of countries with very limited internal traffic), it is an asset for internal connection of Europe’s second largest manufacturing economy: a 300M loan is nothing, compared to the potential damage of having all the airplanes on the ground.

  19. Sarrie————it’s also my question. I am not a lawyer or something like that. But does this mean, that Alitalia will definitely fly until (at least) end of April 2018??

    Any idea?

    Martin

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