LAXintl
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Alitalia On Verge Of Bankruptcy - Again

Sun Dec 23, 2012 8:06 pm

Several financial stories out this weekend that Alitalia has yet again run into deep financial troubles.

Ahead of planned January 12 shareholder deadline there is talk the carrier which has accumulated €735mil in losses the last 4-years might need to be either renationalized, or find new investors. Current Alitalia shareholders have not been able to find the cash needed to recapitalize it.

The ongoing economic slump and high oil prices combined with relentless competition in Europe from LCCs and train service has seen the core Alitalia airline operation be loss making. The carrier 2012 loss has been running €150mil more than 2011.

One of the options being considered is asking Air France which has a 25% stake in Alitalia to acquire full control at a heavily discounted price while injecting capital to keep the company afloat.

Multiple stories:
http://en.europeonline-magazine.eu/i...uble-again-report-says_255990.html
http://www.brecorder.com/world/europ...on-verge-of-bankruptcy-report.html
http://www.france24.com/en/20121221-alitalia-verge-bankruptcy-report

=
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SInGAPORE_AIR
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RE: Alitalia On Verge Of Bankruptcy - Again

Sun Dec 23, 2012 8:17 pm

As a person who foolishly allowed himself to be a paying passenger of Alitalia and subsequently experience and witness a shockingly poor standard of service rendered by Alitalia staff in June 2012 I am not surprised and struggle to drum up any sympathy whatsoever.

Never again.
Anyone can fly, only the best Soar.
 
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Polot
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RE: Alitalia On Verge Of Bankruptcy - Again

Sun Dec 23, 2012 8:21 pm

Quoting LAXintl (Thread starter):
One of the options being considered is asking Air France which has a 25% stake in Alitalia to acquire full control at a heavily discounted price while injecting capital to keep the company afloat.

What, exactly, is the benefit for AF/KLM?
 
art
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RE: Alitalia On Verge Of Bankruptcy - Again

Sun Dec 23, 2012 8:22 pm

I hope Air France takes it over on condition that it has a free hand to make the changes necessary to make the business viable. If Berlusconi were to come back, I don't suppose that would be allowed. I think the imminence of an election paralyses everything for a few months.
 
jetblueguy22
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RE: Alitalia On Verge Of Bankruptcy - Again

Sun Dec 23, 2012 8:43 pm

Quoting LAXintl (Thread starter):
One of the options being considered is asking Air France which has a 25% stake in Alitalia to acquire full control at a heavily discounted price while injecting capital to keep the company afloat.

I'm not sure why AF would want to take over Alitalia. Even if they get it at a bargain price they have large losses. Not something to take on when AF is struggling to make money itself.
Blue
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art
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RE: Alitalia On Verge Of Bankruptcy - Again

Sun Dec 23, 2012 9:25 pm

Quoting jetblueguy22 (Reply 4):
Quoting LAXintl (Thread starter):
One of the options being considered is asking Air France which has a 25% stake in Alitalia to acquire full control at a heavily discounted price while injecting capital to keep the company afloat.

I'm not sure why AF would want to take over Alitalia. Even if they get it at a bargain price they have large losses. Not something to take on when AF is struggling to make money itself.
Blue

No point in injecting capital to keep it afloat as it is - it will just sink again.
 
BMI727
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RE: Alitalia On Verge Of Bankruptcy - Again

Sun Dec 23, 2012 9:34 pm

Quoting LAXintl (Thread starter):
Alitalia On Verge Of Bankruptcy - Again  

And the winner of "Least Surprising News Item" goes to...

Quoting Polot (Reply 2):
What, exactly, is the benefit for AF/KLM?

Looking at one huge loss on a balance sheet is less depressing than two, maybe?
Why do Aerospace Engineering students have to turn things in on time?
 
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OA260
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RE: Alitalia On Verge Of Bankruptcy - Again

Sun Dec 23, 2012 9:40 pm

Quoting SInGAPORE_AIR (Reply 1):
As a person who foolishly allowed himself to be a paying passenger of Alitalia and subsequently experience and witness a shockingly poor standard of service rendered by Alitalia staff in June 2012 I am not surprised and struggle to drum up any sympathy whatsoever.

Cant disagree there even though it would be a shame to the staff who would loose their jobs. Giving away nearly free tickets has not helped either.   Their IT leaves a lot to the imagination.
 
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Aquila3
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RE: Alitalia On Verge Of Bankruptcy - Again

Sun Dec 23, 2012 10:05 pm

I am not a fan of Alitalia at all, especially since we are paying its failures with our pockets.
II mean our ones, not somebody's else in EU.
Also I would think is normal that a Government would try to keep a strategic asset like a national airline alive whenever possible, of course. The fact that Government would not be the one that other, better, countries would choose for us, I am sorry to say, at the moment it works like this, we have not yet given up our sovereignty to them.
I will dare to say that a weak Italy is even useful for some of our EU "friends".

What surprised me is who got AZ last time.
Colaninno, for what I know, is far to be a friend of the then Prime Minister Berlusconi. He is openly involved in the opposite Left Party, now named PD. If PD wins the next February elections chance is that he will be our Minister for Industry (may God save us).

About assets, once you get rid of all the people you do not need (hope it does not happen) AZ has a quite modern fleet and has some interesting slots and rights, especially the lucrative LIN-FCO route and in MXP. The area around MXP is STILL one of the most productive in EU, with a population and a product comparable to some small rich European Nations. Rome , especially if you put Florence together, on the other hand, STILL has some double-digital percentage of the worlds cultural heritage and that means a lot of leisure traffic that can be pursued.
So whoever will get such assets, could get profit from them. Myself I doubt that AF ( the most probable taker) will, however.
chi vola vale chi vale vola chi non vola è un vile
 
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a36001
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RE: Alitalia On Verge Of Bankruptcy - Again

Sun Dec 23, 2012 10:31 pm

Would it be better if Alitalia was actually wound up, and a new carrier started with absolutely no connection to the old airline? And I mean no previous management at any level, government or financial connection to the original airline.   Happy Christmas  
 
art
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RE: Alitalia On Verge Of Bankruptcy - Again

Sun Dec 23, 2012 10:37 pm

Quoting Aquila3 (Reply 8):
Also I would think is normal that a Government would try to keep a strategic asset like a national airline alive whenever possible, of course.

I don't understand. What makes AZ a strategic asset? They provide a service to the economy that other airlines could provide with less risk of the service becoming unavailable due to financial problems preventing the airline from providing the service.

Quoting Aquila3 (Reply 8):
About assets, once you get rid of all the people you do not need (hope it does not happen)

Why do you hope AZ keeps people it does not need? Makes it more likely for AZ to lose money and go bust, doesn't it?
 
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Aquila3
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RE: Alitalia On Verge Of Bankruptcy - Again

Sun Dec 23, 2012 10:58 pm

Quoting art (Reply 10):
I don't understand. What makes AZ a strategic asset? They provide a service to the economy that other airlines could provide with less risk of the service becoming unavailable due to financial problems preventing the airline from providing the service.

Yeah, tell this to our Hungarian friends.
I understand your thinking, but a *WORKING* national carrier is and asset for a Country, especially if your economy is in competition with others that have carriers that are not 100% private.

then:

Quoting art (Reply 10):
About assets, once you get rid of all the people you do not need (hope it does not happen)

Why do you hope AZ keeps people it does not need? Makes it more likely for AZ to lose money and go bust, doesn't it?

Come on! It's Christmas......
chi vola vale chi vale vola chi non vola è un vile
 
bill142
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RE: Alitalia On Verge Of Bankruptcy - Again

Sun Dec 23, 2012 11:11 pm

Quoting Polot (Reply 2):
What, exactly, is the benefit for AF/KLM?

Well they're already broke, so the benefit for AF/KLM would be to hemorrhage even more cash.

Quoting a36001 (Reply 9):

That's the best thing that could happen but it won't. The Italians need to take the same approach as the Hungarians took.
 
airbazar
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RE: Alitalia On Verge Of Bankruptcy - Again

Sun Dec 23, 2012 11:12 pm

Quoting art (Reply 3):
I hope Air France takes it over on condition that it has a free hand to make the changes necessary to make the business viable.

I'm not sure AF is in a position to take over anything considering their own very precarious economic situation. If it wasn't for KLM bailing them out, AF would be even worse than they are.
 
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Aquila3
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RE: Alitalia On Verge Of Bankruptcy - Again

Sun Dec 23, 2012 11:43 pm

Quoting Bill142 (Reply 12):
That's the best thing that could happen but it won't. The Italians need to take the same approach as the Hungarians took.

Are you sure that what happened to Malev was what Hungarians wanted? Or it just happened out of their control?
And I do not think that the result is so good to boast it around, for the business especially.

Coming back to AZ, again, I hate to support them (I come from the MXP area, so I have some reason), but I am trying to be realist. AZ , with his power and connections has burnt almost everything left of the Italian Aviation. Missing AZ we are almost left with FR and U2, worse than Hungary. Not saying that those LCC are bad (indeed I like U2 enough) , but this is a Country that needs a lot more, just have a cold look to the numbers.

Quoting a36001 (Reply 9):

Would it be better if Alitalia was actually wound up, and a new carrier started with absolutely no connection to the old airline? And I mean no previous management at any level, government or financial connection to the original airline.

Also on the practical side, to "fire" all the management (that for what I remember includes a lot of pilots), fire or furlough all the workers in excess, and start from scratch is very difficult in a country highly unionized, where the protection of the workers at the highest level is seen as matter of civilization. It would drive only in a huge stall, and bloody social conflicts. So, as much it looks undesirable or difficult, I believe the best way is still, again, to try to "fix" Alitalia.

[Edited 2012-12-23 15:47:57]

[Edited 2012-12-23 15:49:17]
chi vola vale chi vale vola chi non vola è un vile
 
flyyul
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 1:25 am

AZ has to develop FCO the way TK developed IST and KL developed AMS etc. In the domestic market - LCC's are eating up profit margins. There's no future in this business. LH/AF/BA are all immune to this - the domestic/short haul product has to be the cost of feeding a sustainable size of long-haul flights.

It always shocks me to see AZ hasn't fully developed long-haul links. There's no doubt that long-haul transfer traffic, and the Italian market is generally high leisure in characteristic. However that can easily be offset by having smaller premium cabins and higher density on its aircraft. (see KLM model)

AZ should be in markets like Shanghai, Hong Kong, Dubai, Delhi, Jo'burg, Montreal, San Francisco, Washington. If it doesn't pursue this type of strategy, they will be too sensitive to ULCCs, and the variety of other long-haul players eating market share away (i.e. TK/QR/EK etc).

FCO is in a very strategic geographic position - especially as a hub connecting middle east/africa/sub-continent from North America/Europe/South America.

Either AZ makes an effort to become a "global" player - or it's just another airline pursuing a long agonizing decline towards bankruptcy
 
Rafabozzolla
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 1:25 am

Politics aside. Italy could have one hell of an airline if business were put first and the entire Rome-hub nonsense was put aside.

A good hub at MXP would be well-located (both geographically and economically) and we're talking about a country of nearly 60M people. Come on, if business is sound, there's a room for a competitive Italian carrier, no comparison with tiny Hungary (all do respect).
 
flyyul
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 1:30 am

Quoting Rafabozzolla (Reply 16):
A good hub at MXP would be well-located (both geographically and economically) and we're talking about a country of nearly 60M people. Come on, if business is sound, there's a room for a competitive Italian carrier, no comparison with tiny Hungary (all do respect).

This is precisely the problem with the Italian aviation market. Rome is the bigger market - but the majority of the high-yield pax are in MXP which is not such a big market in terms of traffic/volume. Look at the American/Asia majors having difficulty establishing MXP services.
 
BMI727
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 1:31 am

Quoting Rafabozzolla (Reply 16):
A good hub at MXP would be well-located (both geographically and economically) and we're talking about a country of nearly 60M people. Come on, if business is sound, there's a room for a competitive Italian carrier,

That's the case for AF/KL buying them. The trick is getting government interference out and cutting costs. If they can get ownership of the major airlines in France, Italy, and the Netherlands and rightsize (read slash dramatically) the whole thing, they could end up with a powerful European airline that can form a triumvirate with Lufthansa and IAG.
Why do Aerospace Engineering students have to turn things in on time?
 
krisyyz
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 1:47 am

Quoting Aquila3 (Reply 14):
Are you sure that what happened to Malev was what Hungarians wanted? Or it just happened out of their control?
And I do not think that the result is so good to boast it around, for the business especially.

Well just look back at the reaction of the Hungarian people after MA folded, the country basically went to into a state of national mourning. The EU's regulations on state funds being used to keep MA alive coupled with leasing companies, airports etc demanding their money was the last straw for MA. Their was a lot of politics involved as well, as I'm sure is the case in Italy. MA was on the road to recovery when they pulled the plug, it could have been saved.


The news stories on AZ don't sound very promising. I read very similar stories about MA a few months before their demise. But what are AZ's options for survival? Obviously but management and labour must take some major cuts, but could AZ survive if they stopped or severely downsized their long-haul ops?

KrisYYZ
 
C010T3
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 2:10 am

Quoting Rafabozzolla (Reply 16):
Politics aside. Italy could have one hell of an airline if business were put first and the entire Rome-hub nonsense was put aside.

A good hub at MXP would be well-located (both geographically and economically) and we're talking about a country of nearly 60M people. Come on, if business is sound, there's a room for a competitive Italian carrier, no comparison with tiny Hungary (all do respect).

MXP is not the solution and it will never be. FCO is not AZ's problem.
 
IndianicWorld
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 2:14 am

I hadn't been keeping up with AZ's performance in a while, but I had thought they had done a decent job tryint to turn things around a while back.

The fact that the AZ group of airlines seems to include just about every airline brand in the country, it certainly will be interesting to see what happens if things do end up badly. Will be a large void to fill.
 
miaintl
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 2:22 am

Quoting C010T3 (Reply 20):

If FCO is not AZ's problem than what is? FCO is poorly located to be a hub, and even though MXP does not have the traffic volume of FCO it can still be profitable by being a hub airport relying on connecting traffic to central and eastern Europe.
 
flyyul
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 2:49 am

Quoting miaintl (Reply 22):
If FCO is not AZ's problem than what is? FCO is poorly located to be a hub, and even though MXP does not have the traffic volume of FCO it can still be profitable by being a hub airport relying on connecting traffic to central and eastern Europe.

How can AZ be effective when the majority of pax destined for Italy want to arrive at FCO. By giving up FCO - it's giving up to the bulk of foreign carriers overflying MXP to land at FCO.

The problem remains that AZ's domestic/short-haul product is bleeding very heavily. AZ needs a larger long-haul fleet / product to compensate for this. It's a race to the bottom. If you're a legacy carrier either you try to compete with the global players - or get swallowed up. There's no reason why AZ is not in Jo'burg, Hong Kong, Shanghai, San Fran, Montreal, Mexico, Dubai. It needs to be in these markets as the good old days of profit on FCO-CTA, FCO-LIN are not around for long.

[Edited 2012-12-23 18:53:34]
 
miaintl
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 3:11 am

Quoting flyyul (Reply 23):

That's what the situation was back in the old AZ before 2008. Back then MXP got the connecting traffic and FCO got the O&D passengers and it worked well. AZ cannot expand to other long-haul destinations because its short/medium haul feed at FCO is very small. MXP is just the better airport to establish a Legacy carrier that relies on a hub and spoke system.
 
LAXintl
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 3:28 am

AZ being based MXP will never work as long as Milan is split with two competing airports.

People don't want to trek out MXP, when you have LIN right in town.

With key European routes and domestic markets being flown primarily from Linate due to the demand, MXP is left with a much weaker feed network.

This was even brought up as a mayor reason for the last AZ restructuring. At MXP virtually the entire AZ long-haul network was loss making.
From the desert to the sea, to all of Southern California
 
C010T3
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 4:01 am

Quoting miaintl (Reply 22):
If FCO is not AZ's problem than what is? FCO is poorly located to be a hub, and even though MXP does not have the traffic volume of FCO it can still be profitable by being a hub airport relying on connecting traffic to central and eastern Europe.

It's conjuctural! Haven't you observed how almost all European airlines are going through difficulties and some are even being very pro-active in dealing with it, like Iberia and Lufthansa.
 
IndianicWorld
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 4:04 am

In many ways, AZ is suffering having 2 important cities in their country who both deserve good service, but can not sustain a dual hub operation.

By ignoring one, you leave the other open for traffic to be lost, but covering both sufficiently would not be a viable option.
 
flyyul
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 4:13 am

Quoting miaintl (Reply 24):
That's what the situation was back in the old AZ before 2008. Back then MXP got the connecting traffic and FCO got the O&D passengers and it worked well. AZ cannot expand to other long-haul destinations because its short/medium haul feed at FCO is very small. MXP is just the better airport to establish a Legacy carrier that relies on a hub and spoke system.

Based on what exactly? The principal problem behind MIL is the fact all domestic/short haul pax go to LIN. MXP becomes a transit traffic only airport for AZ short haul network - which means flights are full in one direction given that the WBs don't sit on the ground for 6-10 hrs during the day & need multiple daily frequencies to feed long-haul banks.

AZ prior to 2008 made huge losses in MXP - bulk of which was the short/mid-haul again due to a lack of national local traffic at the airport.

At FCO - everything is integrated. AZ could build up long-haul services feeding into a single airport satisfying both transit and local boardings. FCO is also better for Italian traffic flowing southbound to Africa/Middle East and South America.
 
flyyul
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 4:17 am

Quoting IndianicWorld (Reply 27):
By ignoring one, you leave the other open for traffic to be lost, but covering both sufficiently would not be a viable option.

It is if each hub has a different focus. If MXP/FCO are fighting for same customers that's where the difficulty begins. At MIL all local short/mid haul pax go to Linate. There's no feed/local mix potential at MXP
 
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lightsaber
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 4:42 am

Where is the money going to come from to save AZ again? After reading this thread, I am more of the opinion if something major doesn't change, they will just have to shut down.

Quoting krisyyz (Reply 19):
But what are AZ's options for survival? Obviously but management and labour must take some major cuts,

I ask that too. How could AZ become profitable? The changes required are greater than will be socially tolerated. That means a shutdown. Maybe not now, but after the next bankruptcy.

Quoting BMI727 (Reply 6):
And the winner of "Least Surprising News Item" goes to...

Yep. Although I think that news on AR is even less shocking:
AR Hits Record Loss Of U$976M In 2012 (2,7M/day) (by Gonzalo Dec 21 2012 in Civil Aviation)

Quoting Aquila3 (Reply 14):
I believe the best way is still, again, to try to "fix" Alitalia.

How? There must be a draconian solution if it is to work. There is so much opportunity as noted by:

Quoting flyyul (Reply 15):
AZ has to develop FCO the way TK developed IST and KL developed AMS etc. I

I'm going to agree with others that MXP ahs more chance, but only if LIN were to be closed. The first step to saving AZ is ironically closing LIN. Normally I'm pro airport growth, but:

Quoting LAXintl (Reply 25):
AZ being based MXP will never work as long as Milan is split with two competing airports.

   Split hubs never work. There are too many more convenient alternatives today.

Quoting flyyul (Reply 28):
At FCO - everything is integrated. AZ could build up long-haul services feeding into a single airport satisfying both transit and local boardings. FCO is a

Only in that it is one location. A high premium O&D traffic is a far better start to a new hub.

Quoting flyyul (Reply 23):
AZ needs a larger long-haul fleet / product to compensate for this.

I would argue AZ needs to downgauge and introduce more frequency and destinations (787 or A350).

Lightsaber
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flyyul
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 4:55 am

Only in that it is one location. A high premium O&D traffic is a far better start to a new hub.

Quoting lightsaber (Reply 30):
Only in that it is one location. A high premium O&D traffic is a far better start to a new hub.

if MXP is so high-premiun - why have most US major reduced their scale in MXP. USAir would flies MXP-PHL/CLT iso of FCO. Emirates flies it's high premium A380 to FCO.

The Italian north is very fragmented. With airports in TRN, BLQ, VRN, PSA, FLR, MXP, LIN, BGY, GOA - there's only one major airports in the Central/South capital region in FCO.

AZ doesn't have a hope in Milan. If LIN closes, MXP still doesn't address the geographic circuitous of pax flying northbound to fly to South America from Italy.
 
BMI727
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 5:19 am

Quoting lightsaber (Reply 30):
Split hubs never work. There are too many more convenient alternatives today.

I think AF/KLM should bring Alitalia into the fold and scrap any idea of an international hub in Italy. Cut Alitalia down to a more or less local Italian airline and funnel more traffic via CDG and/or AMS. Obviously, you can't just keep connecting passengers away, but capacity should be dramatically cut and connecting capacity moved out of FCO or MXP.
Why do Aerospace Engineering students have to turn things in on time?
 
Byrdluvs747
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 6:40 am

Where is AF or the Italian govt going to get the money to buy out AZ?

Quoting SInGAPORE_AIR (Reply 1):
witness a shockingly poor standard of service rendered by Alitalia staff in June 2012
Quoting OA260 (Reply 7):
it would be a shame to the staff who would loose their jobs.

Why would it be a shame when the employees don't seem too concerned with providing proper customer service? I won't cry for Alitalia.
The 747: The hands who designed it were guided by god.
 
Rafabozzolla
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 8:21 am

Quoting flyyul (Reply 17):
This is precisely the problem with the Italian aviation market. Rome is the bigger market - but the majority of the high-yield pax are in MXP which is not such a big market in terms of traffic/volume. Look at the American/Asia majors having difficulty establishing MXP services.

Well, I think it is similar to the situation at FRA (in a smaller scale, of course), how much local traffic does it generate? And LH is fine ignoring the leisure traffic in Berlin.

As for the dual airport situation, I agree, that IS a problem. Why didn't Italy close down LIN when MXP was redeveloped (a la Munich)? I think the Italian elite opted for convenience as opposed to a greater strategic planning.
 
asctty
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 8:45 am

Many people talk of the importance of keeping a national flag carrier afloat. Unfortunately, AZ is a more of a national embarrassment than a flag bearer. Many people are also concerned about the jobs involved, but AZ owes the money to someone else who's jobs are also at risk. This airline has been a basket case for years, and some of the posts here suggest that they are far behind other European airlines in terms of quality of service. There are other EU 'national' airlines in a similar position, e.g. Iberia, where they are no longer owned by their respective Governments, no longer make any money, yet still are run by management who operate as though they still were Government departments, i.e. over budget, over staffed, union dominated and therefore completely inefficient. The LCCs in Europe have a field day with these ailing airlines hence their long drawn out demise.
 
Hywel
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 9:25 am

Quoting OA260 (Reply 7):
Giving away nearly free tickets has not helped either.

Haha, I see that you took advantage too! I got LHR-FCO-OTP-LIN-LHR for 2 euros incl. all taxes. Plus a few other trips...
 
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lightsaber
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 9:36 am

Quoting flyyul (Reply 31):
if MXP is so high-premiun - why have most US major reduced their scale in MXP.

Then perhaps Italy has no airport viable as a hub. I believe MXP would be with the inner airport closed (providing far better connecting traffic). Otherwise, Italy has no viable hub city. The premium traffic to FCO is low yield. Now airlines that do J for cheap, e.g., EK will expand.

Quoting BMI727 (Reply 32):
Cut Alitalia down to a more or less local Italian airline and funnel more traffic via CDG and/or AMS.

AZ as a local Italian airline has no value. In that scenario it should just be shut down. It would be cheaper to just fly the passengers on AF/KL metal to the hubs. Intra-Italy traffic is going to the LCCs or trains and nothing is going to stop that.

Note: I think AZ will be 'saved,' but I also think the business case will be practically ignored. Heck, I just went to Alitalia's web site and after a few minutes I went 'screw it, I'll just use Orbitz.' I ended up having to search blogs to find their route map. My end conclusion is that AZ is weak where there is growth, so I don't know how to resurrect them.

Quoting Byrdluvs747 (Reply 33):

Where is AF or the Italian govt going to get the money to buy out AZ?

China or Germany.   

Lightsaber
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bueb0g
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 10:45 am

Quoting Byrdluvs747 (Reply 33):
Why would it be a shame when the employees don't seem too concerned with providing proper customer service? I won't cry for Alitalia.

And this is based on what? Experiences with a few cabin crew or customer service agents? It's unfair to paint all the employees with the same brush, especially as many of the airline's employees will never have any contact with customers, so the fact that you seem to be implying that it is somehow just for them to lose their jobs is extremely callous.
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IndianicWorld
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 10:59 am

Quoting bueb0g (Reply 38):
And this is based on what? Experiences with a few cabin crew or customer service agents? It's unfair to paint all the employees with the same brush, especially as many of the airline's employees will never have any contact with customers, so the fact that you seem to be implying that it is somehow just for them to lose their jobs is extremely callous.

Speaking from a point of view of an ideal world viewpoint, what you say is true, but in the case of any company, each experience often becomes their opinion on the entire organisation. Its hard to seperate out bits and pieces, moving blame and absolving others of any part in an event which someone has been inconvenienced or unprofessionally treated.

Some would say the ability for bad customer service to continue says a lot about an organisation's ability to manage itself.

The last time I flew AZ was 10 years ago and it was nothing special but it wasn't bad at all, however I have no idea how it is going these days from personal experience.

Overall though, AZ is suffering from a lack of structure in its own country, with so many variables going on which make it hard to really thrive. Politics is never far from anything in business in Italy it seems, which leaves AZ very little room to move.
 
Azure
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 11:08 am

Quoting BMI727 (Reply 18):
If they can get ownership of the major airlines in France, Italy, and the Netherlands and rightsize (read slash dramatically) the whole thing, they could end up with a powerful European airline that can form a triumvirate with Lufthansa and IAG.

Woohoo ! Wake up ! This triumvirate already exists and AF/KL is part of it. Passenger traffic : LH/LX/OS group : 90 M / AF/KL group : 75 M / IAG : 50 M. (Source : corporate websites of said groups)...

Quoting airbazar (Reply 13):
If it wasn't for KLM bailing them out, AF would be even worse than they are.

Don't you know better ? KL has grown in recent years through synergies with AF. The Group's financial strategy is to pass the losses in France and the profits in Holland for tax purposes, even if AF/KL, granted, is globally loss-making (after being a cash machine). Much more could be said on this matter but it would be off topic in this thread.


AF currently own 25% of AZ. According to the "fenice" (Phoenix) agreement signed in 2008, AF have the possibility to acquire 100% of AZ between Jan.13 and Oct. 28, 2013 through an exchange of shares with the other AZ shareholders (Benetton, Riva, Banca Intesa,...). The main problem for AF/KL lies in the weakness of their share value at the Paris stock Exchange right now. The group is worth just over one billion euros (the value of 2 A380s...). An exchange of shares would result in giving an exorbitant weight to the Italian companies into the capital of Air France-KLM...

Therefore my guess is that AF/KL will try to gain time in order to buy AZ at a very low price. AF made it clear they would seek profitability in AZ by cutting jobs and by re-sizing the airline. They will keep a small hub at FCO (with only the most profitable intercontinental routes) and use LIN to feed their own hubs of CDG and AMS.

Sad to see such a situation that could have been avoided 5 years ago when AF offered 1,5 billion euros for AZ... But Berlusconi wanted to keep Alitalia italian and this resulted in a loss of time and probably in more inconveniences for both AZ employees and the italian citizens themselves... Should Berlusconi be back next year, I would be more than worried for the future of AZ... They have already merged with Air One, they cannot survive alone, and the prospects of political interference would afraid all reasonable investors...
 
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 11:17 am

Not reading all this, the day when any carrier, regardless from which country, should buy a part or the whole of AZ, should be the day when Italian unions as well as politicians become reasonable and responsible social partners.

The funny thing is, that day can exactly be pin-pointed, it'll be the day when pigs can fly.

Till then, the old rule applies : Wanna buy AZ? Betta keepa u hands off.




   
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 12:25 pm

I thought AZ had been doing better after privatisation and merger with Air One...? What's the reason for this now? Who is telling the truth?

In any case, I do see a future for AZ under the following conditions:

- AF/KL buys it for a dirt cheap price, under the condition that the airline be significantly restructured
- The future - no, already the present - of Italian domestic traffic is trains and LCC's. Stay away from that or set up something like IB Express or 4U that can compete on certain routes where air travel is still viable
- A right-sized FCO hub with a KL-type business model (smaller premium cabin, higher density) can work alongside CDG and AMS. MXP cannot work as long as LIN remains open. But LIN can be used to feed CDG / AMS / FCO.
 
EricAY05
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 12:28 pm

I'm kind of tired of people bashing airlines. For some passengers nothing seems to be good enough. Unfortunately my experience with AZ is very limited, but next year I hope to fly with them a few more times.

My two longhaul flights with AZ were great. One on an old 763 and one on a brand new 332. Service was excellent both ways and the only thing worth complaining about was the lack of AVOD on the 763. Heck, I even got two glasses of water during final descent! (I knew I had to drink something before standing in line for two hours at MIA immigration)

I hope AZ will survive and not merge into AF/KL, since I would much rather fly with them than with AF. At least their planes are clean on the outside  
 
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 12:30 pm

Is AZ held back by a lack of corporate traffic opportunity? Other carriers are based in business centers that are far more important than Rome. Yes, AZ does have some select long-haul flights from MXP, but on the whole, I wonder if a critical mass of business travelers is there to support their cost structure. I'm afraid AZ may be facing a situation similar to OA and IB; their host country is simply not the business player others are despite a few strong industries (clothing, cars, some electronics). Yes, labor relations have often been problematic at AZ, but you really have to look at the demand side of the equation to determine if enough opportunity is present in Italy to be profitable as a carrier based in FCO.
 
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 1:22 pm

Quoting lightsaber (Reply 30):
I ask that too. How could AZ become profitable? The changes required are greater than will be socially tolerated. That means a shutdown. Maybe not now, but after the next bankruptcy.

There is hope for AZ but it requires some political will. Ironically enough, they can look in the mirror and see TAP circa 1995, and follow a similar path if they chose to. They need deep cuts. Any route that doesn't make money has to go. They need to be reborn as a small regional airline, find their niche, and grow from there. There is no other solution.

Quoting Azure (Reply 40):
Sad to see such a situation that could have been avoided 5 years ago when AF offered 1,5 billion euros for AZ... But Berlusconi wanted to keep Alitalia italian and this resulted in a loss of time and probably in more inconveniences for both AZ employees and the italian citizens themselves... Should Berlusconi be back next year, I would be more than worried for the future of AZ... They have already merged with Air One, they cannot survive alone, and the prospects of political interference would afraid all reasonable investors...

  
 
brindabella
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 2:54 pm

Quoting SInGAPORE_AIR (Reply 1):
As a person who foolishly allowed himself to be a paying passenger of Alitalia and subsequently experience and witness a shockingly poor standard of service rendered by Alitalia staff in June 2012 I am not surprised and struggle to drum up any sympathy whatsoever.

Never again.
Quoting Aquila3 (Reply 11):
Come on! It's Christmas......

A few years ago my daughter & myself took an AZ flight Cairo-Rome. After a severely abbreviated service, the cabin crew settled-down to some serious partying with the many pax who were also clearly AZ cabin-crew. From there to Rome the rest of the pax were totally ignored; in fact we were obviously in the way!

I mentioned to my daughter that this airline "had the stink of death about it".

Berlusconi shortly thereafter paid a mountain of lira to anyone foolish-enough to take on this shambles of an operation (you couldn't call it an airline). He got that one right!

Two cases:
1) there are many new-hires since the takeover who are in fact hard-working & don't deserve to lose their jobs. For their sake, I hope the airline finds a saviour.
2) the old staff are still there, still poisoning everything they touch; IMO they deserve less than nothing, as they drove AZ into bankruptcy in the first place.

Quoting Aquila3 (Reply 14):
Missing AZ we are almost left with FR and U2, worse than Hungary.

I understand your concern that Italy will be left with not much at all.
However if you look at the rise of say AirAsia (one of many), then it is much more sensible to just support the changes which make it possible for people like Fernandez to create wealth for everyone. AZ is history. Gruesome history.
Unless it has changed an amazing amount, it is still worth less than nothing, Much less.

The last thing the good people of Italy need is to nationalise it again!

(BTW, I'm an Aussie as you can see; but Italy rates as one of my most, most favourite countries. I would live there in a moment. So I'm saying all this not to knock Italy; but more with a sense of anger at the bludgers (another Australian term) who were taking all the good people of Italy for a ride on that Cairo-Rome flight. They were hardly even pretending to work. No wonder the airline went under.)

Carn the Azzuri! (Aussie term again).

cheers Bill
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 3:11 pm

Quoting LAXintl (Thread starter):
Ahead of planned January 12 shareholder deadline there is talk the carrier which has accumulated €735mil in losses the last 4-years might need to be either renationalized, or find new investors.

Or close down.

Quoting Polot (Reply 2):
What, exactly, is the benefit for AF/KLM?

Politicians get to spend more money they do not have, deserve or are entitled to. They get to say they "saved" it. To the customer, public or AF/KLM - none.

Quoting Aquila3 (Reply 8):
lso I would think is normal that a Government would try to keep a strategic asset like a national airline alive whenever possible, of course.

Why? What is strategic about an airline that is failing that happens to have the name of the country painted on it. BTW - When American's show any hint of nationalism - the EU/Europe is quick to condemn. I find it interesting that it is okay for the EU/Europe to be nationalistic.

Quoting Aquila3 (Reply 11):
I understand your thinking, but a *WORKING* national carrier is and asset for a Country,

Again - why. In today's global market - there are few places that benefit from a 'national' carrier regardless. A "national" carrier - which means on that the government supports - would only have value serving places that could not get service otherwise - and Italy is not that.

BTW - I did not support nationalization of the US auto industry either.

Quoting Rafabozzolla (Reply 16):
Politics aside. Italy could have one hell of an airline if business were put first and the entire Rome-hub nonsense was put aside.

History is full of cases that would be different "if this and that". BTW - Italy has several good airlines serving it.

Quoting krisyyz (Reply 19):
went to into a state of national mourning.

And that is a reason to waste money? No - I think not.

Quoting asctty (Reply 35):

Many people talk of the importance of keeping a national flag carrier afloat.

Again - why? Alitalia is just a poorly run airline that is failing.
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 3:59 pm

Having said the above, I plan to take Alitalia to court in Q1 next year. Hopefully they survive long enough to pay me out !
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LAXintl
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RE: Alitalia On Verge Of Bankruptcy - Again

Mon Dec 24, 2012 4:41 pm

Quoting lightsaber (Reply 37):
Then perhaps Italy has no airport viable as a hub. I believe MXP would be with the inner airport closed (providing far better connecting traffic). Otherwise, Italy has no viable hub city. The premium traffic to FCO is low yield. Now airlines that do J for cheap, e.g., EK will expand.

   I think the proper hub opportunity has come and gone for AZ.

Besides the geographic, economic, and demographic issues present with Italy, I think the fact remains that Europe and entire region has plenty of hubs already.

Quoting lightsaber (Reply 37):
AZ as a local Italian airline has no value. In that scenario it should just be shut down. It would be cheaper to just fly the passengers on AF/KL metal to the hubs. Intra-Italy traffic is going to the LCCs or trains and nothing is going to stop that.

I'm not saying AZ should be shut, but to me it certainly should become a very different airline.

Again I'd forget the notion of trying to connect people via a central hub. Instead I'd focus on strictly Italy O&D point-to-point markets. Like SWA in the US, don't have a single base but have multiple ones and offer service on key routes from these Italian cities. For example if Turin has strong demand to London, then connect the two. If Naples can support at Barcelona link, then connect the two.

Same idea for the longhaul game. Maybe only a handful of markets can be profitably sustained at the end, but yes operate these few long hauls from FCO, MXP or anywhere else it makes sense.

Of course this entire concept is reliant on the AZ cost structure being massively overhauled. It needs to become a lean carrier that can sustain competition against LCCs in Europe and to some degree hold its own against trains domestically on trunk routes.

Just my $0.02
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