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F9flyer
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Alitalia bankruptcy and selling process discussion thread

Wed Apr 12, 2017 8:10 pm

I am having a tough time tracking down the truth to a rumor that Alitalia will be out of cash effecting April13, 2017 (tomorrow) is anyone hearing anything verifiable?
Last edited by SQ22 on Wed Apr 18, 2018 5:04 pm, edited 2 times in total.
Reason: Title updated
 
DELTA777
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Re: Alitalia Cash Flow

Thu Apr 13, 2017 2:26 am

Article from "La Stampa" published today and translated with Google.

The Alitalia negotiation is hanging by a thread. It continues to the bitter end, almost without interruption. Now it's up to the government to try to mend fences to prevent the worst. When there are just over 24 hours to the deadline to find an agreement between the company and unions on the floor, even the large distances between the parties led to a tear in the negotiations: the company has suspended the comparison and trade unions have called for the intervention the Government. Now everything is in the hands of ministers Calenda, Delrio and Poletti that tomorrow will meet the leaders of the CGIL, CISL and UIL, while in Calenda evening met with the company and the nominee for President Luigi Gubitosi. Since the government is making every possible pressure to reach a positive solution.

 
On Thursday deadline set by shareholders for the deal

The situation is "very complicated," he repeats Gubitosi, also returned today to the Ministry of Development for one of the many meetings he is doing with the Government ( "we do a lot," said the minister Delrio, who last night met with the managers together Calenda and colleagues Poletti). The situation was complicated already yesterday, but today 'a bit' more because time is running out, "says Gubitosi. In fact, Thursday is the deadline set by shareholders for the agreement with the unions, whose members have linked the funding of the plan. The financial maneuver, however, would remain of resistance from the shareholder banks, they would have asked for a government guarantee before a new outlay of money. Meanwhile, eclipsed the hypothesis of a possible intervention of CDP, it would be exploring the possibility of involving Invitalia.
 
The unified proposal of the trade unions rejected

In terms of union negotiations, the table is taken up in the morning - while outside a protest took place - with cautious optimism by the representatives of the workers, but in the afternoon the situation was reversed and the company decided unilaterally to terminate the deal . The node, unified counter proposal developed by the unions and professional codes on reducing the cost of flight personnel, the company (which on this chapter remains on its position, demanding wage cuts of 22-32%) rejected considering it insufficient. A tear that led the unions to seek the intervention of politics to unlock a situation.
 
Camusso: "Government and Alitalia must do more"

Upon Alitalia 'workers they have already made proposals. Now the government and Alitalia must do more ", via twitter ask the leader of the CGIL, Susanna Camusso, pointing the finger at the Ministry of Development," may not be the ministry that produces redundancies. " The charge of the department Calenda for its part ensures: "It works to close until the last second useful." But no tricks up their sleeves to save the company, "we do not we will cheat," says the minister Delrio. Finally, the general secretary of the CISL Annamaria Furlan calls "in this so difficult moment for the fate of Alitalia serves everyone's responsibility. First the company. "

http://www.lastampa.it/2017/04/12/economia/alitalia-trattativa-sospesa-ora-scenda-in-campo-la-politica-9mZO4uEETdYxXYEC84894O/pagina.html
 
F9flyer
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Re: Alitalia Cash Flow

Thu Apr 13, 2017 6:33 pm

Thanks Delta777- Better source than I have seen lately, I will keep an eye on it.
 
F9flyer
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Re: Alitalia Cash Flow

Fri Apr 14, 2017 5:30 pm

For those Keeping score...

Yes, Alitalia keeps flying, but my take is that they are delaying the inevitable by 12 to 18 months. Make no mistake, without these agreements it would be a bad day at Italian ticket counters.

From Reuters
Italy's Alitalia, unions agree preliminary deal in last-ditch talks
Alitalia and labor unions reached a preliminary agreement on Friday on job and pay cuts that the loss-making airline says are necessary to keep it in business, union and government officials said.
The tentative deal, needed to unlock fresh financing for the ailing Italian carrier, will however have to be approved by Alitalia workers in a ballot to become valid.
After marathon talks on Thursday night, the company and unions agreed to trim the scale of lay-offs among ground staff to around 1,700 from 2,037 previously envisaged, and reduce cuts to flight personnel wages to 8 percent from up to 30 percent, the head of the CGIL union Susanna Camusso said in a statement.
The government had hoped to win strong union backing for the plan by Thursday so that investors in the airline, including Etihad Airways with a 49 percent stake and Italy's top two banks Intesa Sanpaolo and UniCredit, could launch a cash call on Friday.
That now looks likely to be delayed until after the workers' ballot, which could possibly be held as early as next week.
"If the accord reached is approved by the workers, I imagine the shareholders will put the money in as planned," Industry minister Carlo Calenda told Radio 24 on Friday.
A member of the CGIL union who was present at the talks told Reuters that Alitalia had asked for the ballot to be held next week but it may not be possible to organize it so quickly.
The financing package for Alitalia is worth 2 billion euros ($2.1 billion), including an emergency cash injection of 400 million euros to keep it afloat if the rescue plan does not work out as expected.
The 400 million euro financing is set to be split in half between Etihad and the banks. Calenda said the government was ready to guarantee the 200 million euros to be provided by UniCredit and Intesa, as they have requested. (Reporting by Giulia Segreti and Gavin Jones; Editing by Hugh Lawson)
 
Bostrom
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Re: Alitalia Cash Flow

Fri Apr 14, 2017 8:18 pm

F9flyer wrote:
For those Keeping score...

Yes, Alitalia keeps flying, but my take is that they are delaying the inevitable by 12 to 18 months. Make no mistake, without these agreements it would be a bad day at Italian ticket counters.


Thank you for the update!
 
smi0006
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Re: Alitalia Cash Flow

Fri Apr 14, 2017 8:51 pm

Obviously not of the same scale but an interesting contrast to the way an ailing QF dealt with unions some time ago- struggling with loses and ongoing strike action that was impacting the business with no end to negotiations in site: QF grounded the fleet, whilst stranding passenger it broke the unions redefining their relationship with the airline.

AZ seems my only bogged down by unions, but government intervention and beaucracy in a cycle they can't break. Whilst I believe in unions, and collective bargaining companies can't be run by the workforce. Could a new airlines of the same size escape the same fate in Italy?
 
LHRFlyer
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Re: Alitalia Cash Flow

Fri Apr 14, 2017 10:32 pm

I see Etihad is committing even more money, some €200 million. They must be rueing the day they ever got involved.
 
dcajet
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Re: Alitalia Cash Flow

Sat Apr 15, 2017 1:06 am

Unfortunately for AZ, instead of adapting to the changes in the business over the last 20 years, it has spent that time bickering with the unions, bounced around by Italian politics while losing relevancy at home and abroad in the process and becoming a sad shadow of its former self. In the meantime, the Italian market is now dominated by LCCs. So how AZ expects to increase revenues while shrinking itself in a market where it has very little pricing power, it remains to be seen.

Good luck - it will need it.
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11725Flyer
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Re: Alitalia Cash Flow

Sat Apr 15, 2017 1:10 am

My prediction - Alitalia will cease to exist within the next 12 months.
 
Bostrom
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Re: Alitalia Cash Flow

Sat Apr 15, 2017 8:00 pm

11725Flyer wrote:
My prediction - Alitalia will cease to exist within the next 12 months.


Why do you believe that?

(I'm not saying you're wrong, but so far, Alitalia has always managed to be saved somehow.)
 
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11725Flyer
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Re: Alitalia Cash Flow

Sat Apr 15, 2017 9:00 pm

Of course I may be wrong, but I think time is up. It needs to fail. Yes, there may be a last ditch agreement, but in six months or so, the story will repeat itself. And, the EU will take a dim view of any more government intervention. Italy is broke - it can no longer afford to subsidize Alitalia.

We'll see what happens.

http://www.reuters.com/article/alitalia ... SL8N1HL50M
 
TheGeordielad
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Re: Alitalia Cash Flow

Sat Apr 15, 2017 9:10 pm

Alitalia unfortunately needs to go they're wasted so much money.If they are going to survive they will probably have to go down to something like 30 aircraft.
How much is Alitalia losing?
 
Bongodog1964
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Re: Alitalia Cash Flow

Sat Apr 15, 2017 10:30 pm

11725Flyer wrote:
My prediction - Alitalia will cease to exist within the next 12 months.


My prediction is contrary to yours, when the day finally comes when civil aviation ceases, Not only will Alitalia still be operating, but they'll also still be losing money
 
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eta unknown
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Re: Alitalia Cash Flow

Sun Apr 16, 2017 12:16 am

Well the govt. seems to have found a new magic formula: the 2 banks will lend AZ the money with the govt. as guarantor. Of course, how long EY will continue to throw money away is a mystery- with so much shrinkage you can't produce the plan's revenue projections which are unrealistic even if AZ stayed in current size.
 
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alberchico
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Re: Alitalia Cash Flow

Sun Apr 16, 2017 1:13 am

11725Flyer wrote:
My prediction - Alitalia will cease to exist within the next 12 months.


Sorry but I don't believe for a second that Alitalia will ever close its doors. They will always find an investor or some last minute infusion of funds. They are a cat with 9 lives.

eta unknown wrote:
Well the govt. seems to have found a new magic formula: the 2 banks will lend AZ the money with the govt. as guarantor. Of course, how long EY will continue to throw money away is a mystery- with so much shrinkage you can't produce the plan's revenue projections which are unrealistic even if AZ stayed in current size.


Isn't that basically circumventing the EU's rule on governments bailing out their struggling airlines ?
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lightsaber
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Re: Alitalia Cash Flow

Sun Apr 16, 2017 2:29 am

Bongodog1964 wrote:
11725Flyer wrote:
My prediction - Alitalia will cease to exist within the next 12 months.


My prediction is contrary to yours, when the day finally comes when civil aviation ceases, Not only will Alitalia still be operating, but they'll also still be losing money

I would not bet against that prediction. In fact, it will probably come true.

Alitalia is the ultimate Zombie corporation.

Lightsaber
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aemoreira1981
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Re: Alitalia Cash Flow

Sun Apr 16, 2017 2:52 am

I never got why AZ insisted on having its main hub in Rome, even though the business center for Alitalia is in Milan. I suspect that another EU airline may desire to take on the routes and aircraft, but not the airline or employees itself...maybe Lufthansa using Eurowings?
 
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enilria
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Re: Alitalia Cash Flow

Sun Apr 16, 2017 3:17 am

Bostrom wrote:
11725Flyer wrote:
My prediction - Alitalia will cease to exist within the next 12 months.


Why do you believe that?

(I'm not saying you're wrong, but so far, Alitalia has always managed to be saved somehow.)

I'm going to compare Alitalia to Air Jamaica. To some extent both are/were victims of their own very successful tourism industries. Italy has a very large tourist market. Tourists like to fly on their own airlines, both out of nationalism and out of frequent flyer loyalty. It is very hard for an airline in a country with a lot of tourism to survive. I think that is a huge factor, even beyond unions and the like. Ironically, concentrating around Rome made that much worse as Milan is a more typical traffic mix of tourism and outbound. Just my 2 cents.
 
YIMBY
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Re: Alitalia Cash Flow

Sun Apr 16, 2017 6:32 pm

lightsaber wrote:
Bongodog1964 wrote:
11725Flyer wrote:
My prediction - Alitalia will cease to exist within the next 12 months.


My prediction is contrary to yours, when the day finally comes when civil aviation ceases, Not only will Alitalia still be operating, but they'll also still be losing money

I would not bet against that prediction. In fact, it will probably come true.

Alitalia is the ultimate Zombie corporation.

Lightsaber


I predict that we will continue this very same discussion in the next decade, with the same arguments.
 
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Channex757
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Re: Alitalia Cash Flow

Sun Apr 16, 2017 7:17 pm

What AZ needs is a prepack bankruptcy. Shed the unnecessary parts and emerge from the other side leaner and stronger, with new owners buying the brand and some assets from the receivers.

Can't see that happening though as the unions would fight any attempt to weaken the numbers and terms of their members. They would instantly lawyer up and use every legal trick going to prevent the sale and restart.

There is the potential for a good airline in there, unfortunately it's buried like an apple at the bottom of a cesspit.
 
Waterbomber
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AZ staff votes against cuts

Mon Apr 24, 2017 7:08 pm

The vote is still ongoing.
The crew vote is overwhelmingly tipped towards the "no".

http://roma.corriere.it/notizie/cronaca ... ea55.shtml

I'm at FCO and staff are just performing duties as if nothing was going on.
 
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lesfalls
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Re: AZ staff votes against cuts

Mon Apr 24, 2017 7:11 pm

Is this the end for AZ then? I hope not.
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winginit
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Re: AZ staff votes against cuts

Mon Apr 24, 2017 7:12 pm

lesfalls wrote:
Is this the end for AZ then? I hope not.


Shouldn't it be though? Like AB, I feel as though just the basic economics at play here dictate that it's time for the sun to set on AZ - they're simply not running a viable business.
 
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Dutchy
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Re: AZ staff votes against cuts

Mon Apr 24, 2017 7:13 pm

lesfalls wrote:
Is this the end for AZ then? I hope not.


Probably and then it rises again from that ashes. Don't understand that someone is willing to put money in this money eating machine.
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aemoreira1981
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Re: AZ staff votes against cuts

Mon Apr 24, 2017 7:17 pm

The airline's routes should be put up for sale with the winner also acquiring the leases on aircraft. The business model of AZ has to end, which is why staff should be excluded from any sale. Might Air France-KLM be interested and implement an LCC structure? Might IAG be willing to expand Vueling? Might Lufthansa give Italy another try and make Milan a hub and reduce intercontinental routes from Rome?
 
Waterbomber
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Re: AZ staff votes against cuts

Mon Apr 24, 2017 7:35 pm

As far as I know, if shareholders make good on their threats, the company will go into amministrazione straordinaria, a form of protection from creditors. Then a commissary will be named and he will have 15 days to find a solution to avoid insolvency. If insolvency is declared, it's game over.
 
TheGeordielad
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Re: AZ staff votes against cuts

Mon Apr 24, 2017 7:56 pm

Sadly this looks like the end.
Why say no.If you get your wage cut it's better than not having a job is it AZ staff.In an economy which hasn't been in its prime for the last few years.Really AZ staff.
 
Skywatcher
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Re: AZ staff votes against cuts

Mon Apr 24, 2017 7:57 pm

How many times has AZ failed? Why would any creditor/lender/investor take a chance on them?
 
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Aesma
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Re: AZ staff votes against cuts

Mon Apr 24, 2017 8:14 pm

Are they playing on the rise of nationalism and populism, hoping the government will inject more cash to avoid the embarrassment of the national airline folding ?
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danj555
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Re: AZ staff votes against cuts

Mon Apr 24, 2017 8:40 pm

Just to double check. A 'no' vote rejects the 8% pay cut (and other things) and starts a 6 month folding process?
 
toltommy
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Re: AZ staff votes against cuts

Mon Apr 24, 2017 10:32 pm

aemoreira1981 wrote:
The airline's routes should be put up for sale with the winner also acquiring the leases on aircraft.


The routes have no value. If a european carrier wanted to open up on the same routes, I don't think there is anything to stop them under EU open skies. Given AZ's financial struggles, the aircraft leases probably are not competitive to assume. Better that the planes be returned to the lessors, and the planes leased or sold to other airlines at market rates. The employee decision is short sighted, IMO, but it is what it is. 8% probably isn't really enough to make a difference anyway. Sadly, it's past time for Alitalia to go.
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ClipperYankee
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Re: Alitalia Cash Flow

Mon Apr 24, 2017 11:28 pm

I flew them for the first time two weeks ago, FCO-VCE. The counter staff were grumpy but the in flight crew were quite nice. Pity but they've been slogging along for too many years now.
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commavia
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Re: AZ staff votes against cuts

Mon Apr 24, 2017 11:35 pm

TheGeordielad wrote:
Why say no.If you get your wage cut it's better than not having a job is it AZ staff.In an economy which hasn't been in its prime for the last few years.Really AZ staff.


I'd ask the question differently: why say yes? Italian politicians have - for decades - repeatedly shown that when faced with the prospect of liquidation of the national flag carrier, they'll step in and bail Alitalia out, and in the process stave of economic reality of Alitalia's workers and unions. Alitalia's workers have just, yet again, called the politicians' bluff. We'll see if this time is any different - given the Italian government's mounting financial pressures, perhaps it will be. Heading right into Italy's peak summer tourist season, the timing couldn't be more awful - for just about everyone involved.
 
IPFreely
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Re: AZ staff votes against cuts

Tue Apr 25, 2017 12:05 am

commavia wrote:
Italian politicians have - for decades - repeatedly shown that when faced with the prospect of liquidation of the national flag carrier, they'll step in and bail Alitalia out, and in the process stave of economic reality of Alitalia's workers and unions. Alitalia's workers have just, yet again, called the politicians' bluff. We'll see if this time is any different - given the Italian government's mounting financial pressures, perhaps it will be.


This is 100% correct. Alitalia employees have been down this road several times before and the government has always bailed them out. While the threat of bankruptcy might be real this time, past history gives it little credibility. And from the worker's point of view, if the threat is actually real, Italy has pretty generous unemployment benefits.
 
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kitplane01
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Re: AZ staff votes against cuts

Tue Apr 25, 2017 2:55 am

aemoreira1981 wrote:
The airline's routes should be put up for sale


How does an airline sell it's routes. Except for a few international rights to non-EU and non-US destinations, they have no property rights in those routes.
 
PanHAM
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Re: Alitalia Cash Flow

Tue Apr 25, 2017 8:10 am

It is on the Radio and on-line News that AZ could fold anytime this week. The unions rejected the rescue plan and AZ is losing € 500K daily, They have no assets, they owe Abu Dhabi kilotons of Money and without proper financing the Italian aviation authorities must revoke their AOC.

But the way things go it is more likely that they don't get fuel without cash. A bail out is against EU rules,
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Noshow
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Re: Alitalia Cash Flow

Tue Apr 25, 2017 8:27 am

The brand is an icon no doubt. But what would be the values left, that a new investor could make use of?
 
Kikko19
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Re: Alitalia Cash Flow

Tue Apr 25, 2017 8:32 am

yep, the employees rejecte the cut plan, it will cost 1 bil Eur for the govt, the bankrupcty I mean. inevitable at this point.
 
LHRFlyer
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Re: Alitalia Cash Flow

Tue Apr 25, 2017 8:33 am

It's worth remembering that if AZ folds than (I think) five LHR AZ plot pairs will revert to EY.
 
PanHAM
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Re: Alitalia Cash Flow

Tue Apr 25, 2017 8:40 am

Noshow wrote:
The brand is an icon no doubt. But what would be the values left, that a new investor could make use of?



The value would be Zero, there could not be another "Alitalia" like there cannot be a "Swissair".
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Noshow
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Re: Alitalia Cash Flow

Tue Apr 25, 2017 8:52 am

Well they could name it "Air Dolomitalia" or similar.
 
Bostrom
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Re: AZ staff votes against cuts

Tue Apr 25, 2017 8:52 am

kitplane01 wrote:
aemoreira1981 wrote:
The airline's routes should be put up for sale


How does an airline sell it's routes. Except for a few international rights to non-EU and non-US destinations, they have no property rights in those routes.


I guess their slots at Heathrow have some value.
 
Kikko19
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Re: AZ staff votes against cuts

Tue Apr 25, 2017 9:04 am

Bostrom wrote:
kitplane01 wrote:
aemoreira1981 wrote:
The airline's routes should be put up for sale


How does an airline sell it's routes. Except for a few international rights to non-EU and non-US destinations, they have no property rights in those routes.


I guess their slots at Heathrow have some value.


a part of the slots they had (don't know if they still have...) an entire floor at the empire state building in NY... then you wonder why they lost some money. if owned they could make some money out of the real estate as well.
 
Andy33
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Re: AZ staff votes against cuts

Tue Apr 25, 2017 9:25 am

Bostrom wrote:
kitplane01 wrote:
aemoreira1981 wrote:
The airline's routes should be put up for sale


How does an airline sell it's routes. Except for a few international rights to non-EU and non-US destinations, they have no property rights in those routes.


I guess their slots at Heathrow have some value.


They do have some value to Etihad, but not alas to Alitalia. Etihad bought them from Alitalia during one of the earlier restructuring attempts, and leases them back.

aemoreira1981 wrote:
The airline's routes should be put up for sale with the winner also acquiring the leases on aircraft. The business model of AZ has to end, which is why staff should be excluded from any sale. Might Air France-KLM be interested and implement an LCC structure? Might IAG be willing to expand Vueling? Might Lufthansa give Italy another try and make Milan a hub and reduce intercontinental routes from Rome?


The Milan hub question is almost as much of an a-net regular as the "restart the 757 line" threads. Standard answer is that Milan Linate cannot handle long-haul flights, but is very convenient for the city. Milan Malpensa can handle long-haul but is not particularly convenient for the city. Ideally hubs need both connecting and O&D traffic to prosper. Some have more O&D than others. Domestic and intra-European passengers strongly prefer Linate and vote with their wallets.
US-based posters suggest that the government should close Linate and force everyone to use Malpensa. European posters respond that IAD would be a much better hub if DCA was closed. It goes very quiet for a month or so, and then the cycle starts again.

As regards selling off Alitalia's routes, any EU/EEA airline could start up in competition tomorrow on domestic and intra-European routes so these have no value at all. Indeed part of the problem is that many of the routes already have such competition.
Alitalia routes to those countries who have open skies agreements with the EU/EEA (US, Canada, Morocco and Israel to name the busiest four) could be duplicated as soon as the airlines concerned are accepted by the destination countries. As many already are accepted for flights from elsewhere in the EU, that's not a big problem,
What remains are just the routes that are governed by Italy-destination country bilaterals. Interesting to work out how many of these there are, and if they're worth saving.
 
Bostrom
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Re: AZ staff votes against cuts

Tue Apr 25, 2017 9:50 am

Andy33 wrote:
Bostrom wrote:
kitplane01 wrote:

How does an airline sell it's routes. Except for a few international rights to non-EU and non-US destinations, they have no property rights in those routes.


I guess their slots at Heathrow have some value.


They do have some value to Etihad, but not alas to Alitalia. Etihad bought them from Alitalia during one of the earlier restructuring attempts, and leases them back.


Have Etihad bought all their slots? I thought they only bought some of them.
 
Andy33
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Re: Alitalia Cash Flow

Tue Apr 25, 2017 10:44 am

At the start of the summer timetable season, Alitalia was using slots allowing for 68 air traffic movements per week, so that's 34 arrivals and 34 departures. The report is meant to indicate the user of the slots not the owner.
Source:https://www.acl-uk.org/wp-content/uploads/2017/03/LHR-S17-Start-of-Season-Report1.pdf
They have a grand total of 5 flights a day most days, 2 to LIN and 3 to FCO, which matches the 34 departures a week. This is pathetic compared to what they were operating even 10 years ago.
In 2014 they sold and leased back "5 slot pairs" to Etihad. Some reports described this as half their slot holding, but 5 daily slot pairs comes back to 35 departures per week. If one of the pairs was for six days a week rather than 7, that produces the 34 departures.
 
Bostrom
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Re: Alitalia Cash Flow

Tue Apr 25, 2017 10:59 am

So what happens now? Is there a plan B after plan A was rejected?
Last edited by Bostrom on Tue Apr 25, 2017 11:02 am, edited 1 time in total.
 
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aemoreira1981
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Re: AZ staff votes against cuts

Tue Apr 25, 2017 10:59 am

kitplane01 wrote:
aemoreira1981 wrote:
The airline's routes should be put up for sale


How does an airline sell it's routes. Except for a few international rights to non-EU and non-US destinations, they have no property rights in those routes.


Slots into slot restricted airports would had value. That said, I wonder if EY will apply for fifth freedom rights on the more valuable routes heading west from Rome, such as to London and New York. If the UAE is serious about combining EK and EY, EK could also make FCO a focus city.
 
r2rho
Posts: 3096
Joined: Tue Feb 27, 2007 10:13 pm

Re: Alitalia Cash Flow

Tue Apr 25, 2017 11:07 am

I see Etihad is committing even more money, some €200 million. They must be rueing the day they ever got involved.
I don't think so, because EY knew perfectly well what they were getting into, it's not like any new information has suddenly been revealed. In fact, they probably still have a bit to go to match the amount of money they have burned on AB.

My prediction - Alitalia will cease to exist within the next 12 months.
We've been saying that every 3 years for the past 15 years. So why will it be different this time around? As has been said, AZ is the ultimate zombie airline. What amazes me is how they've been able to circumvent EU regulators each time - I guess it's the classic "too [politically] big to fail".
 
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readytotaxi
Posts: 5432
Joined: Mon Dec 11, 2006 2:09 am

Re: Alitalia Cash Flow

Tue Apr 25, 2017 11:10 am

Bostrom wrote:
So what happens now? Is there a plan B after plan A was rejected?

Yes, hopefully the Mafia will give it a quick shot to the head, long overdue.
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