'Complex and serious problems' exact heavy cost on Alitalia
Monday March 26, 2007
A year "marked by increasingly complex and serious problems" ended with a stunning €405.2 million ($541.7 million) pre-tax loss for Alitalia, which nevertheless promised that it possesses sufficient cash to cover operational and financial costs "for a period well in excess of 12 months."
The loss widened from a €144.2 million pre-tax deficit in 2005. It would have been larger had the board followed through on a plan to write down the value of the fleet by €400 million. It said it chose not to, "taking into consideration current events."
AZ blamed a 16% rise in fuel costs, its ability to cut operational costs by "only" €8 million, a 40% increase in low-cost carriers' presence in Italy and €100 million in lost revenue owing to labor difficulties for its troubling performance. Full-year operating revenue dropped 1.6% to €4.72 billion against a 2.9% increase in costs to €4.99 billion. The company said spinning off Alitalia Servizi accounted for most of the revenue drop. Operating loss expanded to €265.7 million from 2005's €47.5 million.