The new crisis of Alitalia and the prospects for a solution

This study uses the information available as of 30.04.2018. It will be updated according to future availability of relevant data and information.
The first part of the study examines the characteristics of the Italian air transport market in the period 2004-2016 and the role played by Alitalia in it. It also analyses the main economic and industrial results of the national carrier, comparing its costs with those of the major low-cost carriers operating in our country, its direct competitors. Finally, it proposes an initial assessment of the conditions necessary to stop the high losses, determined in the three-year period 2012-15 mainly by a reduction in tariffs, as a result of the high competition on the market, much faster and more incisive than the cost containment achieved by corporate management.
The second part analyses the 2016-18 period during which Alitalia’s crisis first worsened to the point of determining insolvency and receivership, and subsequently the administration of the receivers began the process of sale on the instructions of the government. It shall also examine, to the extent possible given the complete lack of official data, the results of the carrier’s industrial operations in 2016 and 2017.
The third part analyses the prospects for resolving the Alitalia crisis, assessing the various options for public decision-makers. There are three possible outcomes: the first is to sell Alitalia, the second is to close it, and the third is to restructure it. The companyâs failure, its closure, is the worst-case scenario, given the enormous consequences on employment levels, the social and public finance costs it would generate and the almost exclusive reliance on companies flying foreign flags to provide air transport in the Italian skies.
In order to avoid such a situation, the extraordinary administration had two routes available from the outset: either to sell Alitalia to an economic entity which would have been responsible for restructuring it, or to restructure Alitalia, at least to draw up and implement a restructuring plan, and then possibly to sell the carrier to a new economic entity. However, the government has immediately directed the administration of the commission towards a rapid sale, precluding the second hypothesis. However, in the past year, the sale has not been successful and does not appear to be within reach even if the incoming government wishes to confirm it. If this path were to be closed, the other two would remain, of which the only positive sign is that of restructuring. It would, however, be launched after more than a year of pointless loss on a road, that of disposal, with no visible way out.
The path capable of minimising the long-term negative consequences of Alitalia’s crisis, of safeguarding over time the company’s size, its capacity to offer services at sustainable economic conditions and employment levels, and of avoiding dramatic social costs is a very narrow path that must be carefully outlined before it is undertaken. “Knowing to decide”, as Luigi Einaudi claimed. This study will be useful if it can actually improve the state of knowledge.


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