scotron11
Posts: 1181
Joined: Tue Feb 10, 2004 4:54 pm

AZ To Increase Fleet From 2007

Sat Aug 07, 2004 2:01 pm

As part of AZ's recovery plan announced Friday, the state-owned carrier plans to increase its medium-range fleet to 162 from 153 aircraft, while long-range aircraft would rise to 34 from 27, a company source said. (This is according to an article in Reuters)

Existing fleet will be maintained through 2006 and then increase in the following two years. The restructuring plan introduced last Friday was AZ's third in the last 12 months. No concrete details on how they will pull out of their financial crisis, but it expected to include job cuts.

So, how do you increase your fleet and reduce personnel at the same time? Also, where will the money come from to purchase an additional 16 aircraft?
 
baw716
Posts: 1460
Joined: Thu Nov 20, 2003 7:02 pm

RE: AZ To Increase Fleet From 2007

Sat Aug 07, 2004 6:03 pm

The one thing that is important to understand about AZs "industrial plans" is that they are not "plans". They are just ideas that they put on paper and call plans. It is really unfortunate because AZ has always had the assets to be a world class player. But as one very astute manager told me: The best thing about AZ is that it is Italian. Its also the worst thing about Alitalia. You don't have three different industrial plans in five months. It is an enormous task to write an industrial plan for five years. The last one did not take much time to get to the government. Cimoni has been in there only, what a month..maybe two? The problem is the same as when they put Francesco Mengozzi. Very well intentioned men. However, they are not AIRLINE managers. They both have come from the Ferrovia dello Stato (Italian Railway)...

Regarding your question about financing airplanes, its really very simple. Alitalia doesn't buy planes. They buy them and immediately sell them back to the banks that did the financing...and they lease the planes from the Italian banks. A good number of their 1999 767 acquisition (6 aircraft) were all ILFC leases underwritten by BancaIntesa and a number of the other banks (They all had Irish registry). The 777s are registerd in Italy and are owned by a consortium of banks.

If a bank owns a new 777, it can sell it much easier than an old MD80. The entire idea behind the fleet replacement is that it gives Alitalia the ability to have a relatively young fleet and not own anything. The Italian banks give them favorable terms because they know that Alitalia maintenance is really something they do VERY well. They maintain their aircraft like Ferraris. If for some reason AZ does go the way of Swissair, then it will not be a huge problem for the banks to sell off the 777s and the 767s. The Airbuses will go back to Airbus and the MD80s and ATRs will go to the highest bidder.

The bigger issue is what happens to the transportation infrastructure and its tourism industry if Alitalia goes away? Italy has a lot riding on the success of its airline. Until the Italian government sets aside its pride and allows some outside airline consulting firm to come in, I just don't know if they can make it. Its not that their management is bad; they just don't have any.
David L. Lamb, fmr Area Mgr Alitalia SFO 1998-2002, fmr Regional Analyst SFO-UAL 1992-1998
 
HB-IWC
Posts: 4033
Joined: Fri Sep 22, 2000 1:09 am

RE: AZ To Increase Fleet From 2007

Sat Aug 07, 2004 7:02 pm

So, how do you increase your fleet and reduce personnel at the same time?

Increased productivity comes to mind... Alitalia is known to be one of the least productive airlines in Europe. It enjoys in this the questionnable company of the likes of Olympic. I wish them good luck in trying to increase productivity. Italian Labor Unions are just about as infamous as their French counterparts.

 
matt777
Posts: 476
Joined: Wed Oct 24, 2001 8:55 am

RE: AZ To Increase Fleet From 2007

Sat Aug 07, 2004 11:17 pm

Giancarlo Cimoli, is the super-manager that made Ferrovie Dello Stato the best railway system in Europe (Premium EurostarItalia trains travel through all Italy, tickets cost 1/3 of British Rail counterparts and they are the safest railway system in Europe, with less than half of deaths than the German DB).

When he entered AF Argentina">FS, he didn't knew a thing about the Railway industry.
Now, appointed by the Berlusconi goverment, he transfered to Alitalia and became both President and Chairman (Amministratore Delegato).

In just few months Alitalia has increased it's load factors and other figures also show recovery. (It was posted here in a.net btw)
He has announced that he will re-introduce 5 MD-11Combi and 3 ATR42 that were grounded. So in reality, Alitalia is going to increase it's operating fleet in these two years. Going back to Shanghai and Los Angeles next year. Also we don't have to forget that Linee Aeree Italiane S.p.A. has been the launch customer of the EMB-170, with now 6 planes operating for them.

Anyway, AZA will be privatized before the 2006 elections, where Berlusconi will be re-elected by it's people for sure, but let's leave politics out of the question.

Alitalia is an incredibly large intangible asset for Italy, that we italians will never let go. Just like France will never let go AF.
Anyway, for the ones that think there is no future, Alitalia is the market leader in a market that, as sources said some months ago, will grow at a rate of 4% p.a. in the following 10 year period, being the fastest growing in Europe. In business we call it a "Star", and it's the best position you can be on.

Grazie per aver scelto Alitalia, vi auguriamo un buon soggiorno. A r r i v e d e r c i.
 
baw716
Posts: 1460
Joined: Thu Nov 20, 2003 7:02 pm

RE: AZ To Increase Fleet From 2007

Sun Aug 08, 2004 2:10 am

Matt777
I hope you are right! Alitalia is very much a part of the soul of Italy and, as I said before, it is one of the carriers that has the most potential...however there are few things that do need to be fixed.

If Sr. Cimoni is as good as you say, perhaps he can get the unions to work with him instead of against him...over the years, the unions have made things difficult for AZ management. Of course, some of that is due to AZ management, but that is another story.

As to US west coast flying; LAX is the right choice, as much as I would like to see AZ back in San Francisco. For now, let's just keep it flying.
I promise to support that as much as I can.

Buona fortuna!
baw716
David L. Lamb, fmr Area Mgr Alitalia SFO 1998-2002, fmr Regional Analyst SFO-UAL 1992-1998
 
Alitalia744
Posts: 3777
Joined: Thu Mar 30, 2000 8:22 am

RE: AZ To Increase Fleet From 2007

Sun Aug 08, 2004 3:14 am

Alitalia oggi e' domani!

Matti, grazie per le notizie! I'm sure Alitalia will pull through this crisis. I can't wait.
Some see lines, others see between the lines.
 
SafetyDude
Posts: 3654
Joined: Fri Sep 07, 2001 10:02 am

RE: AZ To Increase Fleet From 2007

Sun Aug 08, 2004 4:08 am

while long-range aircraft would rise to 34 from 27
That sounds like more 777s.  Smile/happy/getting dizzy

-Will
"She Flew For What We Stand For"
 
flyyul
Posts: 4395
Joined: Sun Jun 25, 2000 11:25 am

RE: AZ To Increase Fleet From 2007

Sun Aug 08, 2004 4:18 am

Does AZ still intend to fly to Montreal in 2006 as per their master plan?

 
EddieDude
Posts: 6239
Joined: Fri Nov 14, 2003 10:19 am

RE: AZ To Increase Fleet From 2007

Sun Aug 08, 2004 9:09 am

Or to MEX beginning in 2007?
Next flights: MEX-LAX AM 738, LAX-PVG DL 77L, SHA-PEK CA 789, PEK-PVG CA A332, PVG-ORD MU 77W, ORD-MEX AM 738