LAXintl
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Alitalia In Cash Crisis

Wed Sep 04, 2013 12:06 am

Struggling Alitalia has hired investment bank to help tackle a liquidity crisis that may see it running out of cash before the end of the year.

The move is aimed at finding ways to raise more than EUR€400 million to keep the loss-making carrier afloat, according to sources.

The airline, which grew its net loss to €280 million in 2012, said in July it needed EUR€300 million this year to keep running, however has yet been able to reach a deal for a capital increase with its investor owners.

Additionally news is out that a consortium of Italian banks that took part in the carriers 2008 bankruptcy proceedings might seek to sell their stakes as soon as mid October once their lockup period expires.

Story:
Alitalia Hires Bankers To Tackle Cash Crisis
http://news.airwise.com/story/view/1378250990.html

=
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TheCommodore
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 12:11 am

Quoting LAXintl (Thread starter):
The airline, which grew its net loss to €280 million in 2012, said in July it needed EUR€300 million this year to keep running, however has yet been able to reach a deal for a capital increase with its investor owners.

Gosh.

It will have to be someone very brave, who's not scared of taking risks.

Another 400 mil Euro is a big ask, I wish them luck with that.
“At first, they'll only dislike what you say, but the more correct you start sounding the more they'll dislike you.”
 
usflyer msp
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 12:27 am

When is AZ NOT facing a cash crisis? They just lurch from crisis to crisis to crisis and never actually solve any of their fundamental problems. It is probably time to just let AZ die or be absorbed by a stronger, well managed carrier...
 
mercure1
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 12:28 am

I suspect the white knight this time might be EY:
Alitalia In Talks With Etihad Over Stake (by LAXintl Aug 25 2013 in Civil Aviation)

But regardless, the AZ situation is pretty scary consider the massive bleeding they are taking and desperation of running out of money on regular basis.
I don't know how many times the company can hold its hat out and seek recapitalization from its owners.
There are massive structural problem at hand with enterprise which never seem to be properly resolved.
 
thomasphoto60
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 12:33 am

OMG......AZ in crisis, who'd guessed ?

I second the above post, it's probably time to let this carrier fade into the history books.
"Show me the Braniffs"
 
questions
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 12:38 am

Sorry I have not been keeping up with AZ.

1. I thought the new management team, installed several years ago, was able to break through all the old labor rules and bloated salaries. Was this not the case?

2. Operationally can AZ realistically expect to build a financially viable route network given its home market geography? If so, what would that look like?
 
Viscount724
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 12:59 am

Quoting thomasphoto60 (Reply 4):
I second the above post, it's probably time to let this carrier fade into the history books.

Agree. Switzerland is doing just fine without Swissair, and Belgium without Sabena, and you can still reach Hungary quite easily without Malev.

Italy is such a large market I'm sure other carriers will quickly fill in the gaps if AZ disappears.
 
F9Animal
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 1:14 am

Wow, this is sad. Has Alitalia downsized, or done much in terms of cutting loss making routes, and aircraft reductions?
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PHX787
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 2:24 am

Alitalia needs to sever all international routes and focus on the regional routes. Let DL or other Skyteam members handle the Rome-overseas routes.
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B757capt
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 3:51 am

I feel like this thread and the thread on IB cash problems have been up here for years!
The views written by this user are in no manner the views of my employer and should not be thought as such.
 
masseybrown
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 4:31 am

Quoting usflyer msp (Reply 2):
They just lurch from crisis to crisis to crisis and never actually solve any of their fundamental problems.

That's Italy.   Trenitalia, over the last ten years, has laid off 100,000 railroad workers, about half their labor force, and they are *still* considered to be overmanned by about 15% compared to other European railroads.
 
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usdcaguy
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 8:24 am

I have always wondered whether AZ should have retained its hub at MXP in lieu of moving it to FCO, and if that move has had anything to do with the carrier's fortunes. I'm not sure there is a need for a huge hub in Rome when Milan is much more of destination for business travelers.
 
PanHAM
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 8:33 am

The best Italian hub airport is Monaco, aka Munich. It can be reached far better from the wealthy north Italian commiunities than MXP or FCO. In addition, MUC has a better range of destinations and frequencies.

If AZ cannot sustain itself they have to bite the dust. No other carrier and certainly not AFKL can afford to cross subsidíze their operations. State help is against EU regulations
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AWACSooner
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 9:04 am

I wonder if it's time for LH to resurrect their LH Italia brand...except make it out of both FCO and MXP (and maybe VCE) instead of just going toe to toe with Easyjet at MXP.
 
IndianicWorld
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 9:08 am

Its hard to see a way out for AZ at this rate.

Moving to a regional carrier (Europe/Middle East) would likely struggle to compete with its competitors, along with a need to further reduce its cost base. The latter point wont be easy.

Yes, AZ can try and rely on its Skyteam partners for broader coverage, but I am not sure how it can position the carrier to be a viable player.
 
blueflyer
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 9:30 am

Quoting awacsooner (Reply 13):
I wonder if it's time for LH to resurrect their LH Italia brand...except make it out of both FCO and MXP

FCO is much more a VFR/tourism destination. High load factors, perhaps, but low yield. I don't think Lufthansa Italia is coming back anytime soon, but if it is, it'll be focused on Milan again unless the economic center of Italy shifts.

Quoting IndianicWorld (Reply 14):
Its hard to see a way out for AZ at this rate.

My guess is, unless Etihad invests (which I doubt), somehow it is back to 2008.

Then, the profitable routes and assets of the then-government-owned Alitalia were transferred into privately-held Compagnia Aerea Italiana (the current Alitalia) and the rest was left for a bankruptcy judge to deal with. I think we will soon see history repeat itself, minus the losses hopefully.

As far as the network is concerned, I'd go with a MXP hub serving key European cities and two or three intercontinental Skyteam hubs (JFK, ICN and ATL). FCO should be no more than a focus station.

The biggest issue in this plan is the sake of the AirFrance-KLM stake in Compagnia Aerea Italiana.
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aircanadaa330
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 10:52 am

Quoting blueflyer (Reply 15):
The biggest issue in this plan is the sake of the AirFrance-KLM stake in Compagnia Aerea Italiana

with the problems at AF, I wonder if they will sell their stake in AZ.

Quoting mercure1 (Reply 3):

I suspect the white knight this time might be EY:
Alitalia In Talks With Etihad Over Stake (by LAXintl Aug 25 2013 in Civil Aviation)

Last I heard AZ is hoping to improve their situation (if possible) to get bought out by AF I am assuming those plans have changed.
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mercure1
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 10:54 am

Quoting usdcaguy (Reply 11):
I have always wondered whether AZ should have retained its hub at MXP in lieu of moving it to FCO, and if that move has had anything to do with the carrier's fortunes. I'm not sure there is a need for a huge hub in Rome when Milan is much more of destination for business travelers.

We have been through this discussion a million times, but hubing at Malpensa is not feasible as Milan is split into two airports. With the in-city Linate being the local favorite, going to MXP is hardly attractive option unless you are flying longhaul which means airline must discount seats at MXP versus LIN, and in AZ case it was competing against itself at the two airports.

Quoting PanHAM (Reply 12):
The best Italian hub airport is Monaco, aka Munich.

Haha Yes.
For a while I think it was MUC airport, or Air Dolomiti even advertising this. MUC was connected to more Italian airports than anywhere outside Italy I recall.

Quoting IndianicWorld (Reply 14):
Moving to a regional carrier (Europe/Middle East) would likely struggle to compete with its competitors, along with a need to further reduce its cost base. The latter point wont be easy.

   I recall reading, that AZ says its most profitable segment was longhaul as competition in domestic area and shorthaul Europe was very intense with all the LCCs.

While a smaller more Europe focused AZ does sound logical, unless the cost base drops significantly to match LCCs this would be futile.
 
RGFC
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 11:30 am

FCO as a hub has never worked. When AZ was a state-owned airline, it operated quite a lot of routes out of FCO, but how many of them were profitable ? Obviously at that time profitability didn't matter ... Residents of Northern Italy (where most tickets are sold, especially business tickets) rarely used AZ from FCO, going instead to FRA, LHR, CDG, AMS, ZRH (not necessarily to fly on the home-based carrier, but also on other carriers such as for instance SQ or CX to Asia).
MXP as a hub was therefore the most logical choice, but in order for this to work (a) LIN should have been closed and (b) AZ should have offered a better service, since it actualy had to "steal" Northern Italian customers from other airlines. LIN was not closed due to various reasons and AZ's service remained poor, and therefore MXP as a hub was a failure (also as a consequence of KL's divorce from AZ). Additionally, AZ actually never "moved" to MXP, since it maintained a good number of flights at FCO (and the crew were also mostly Rome-based): two hubs in Italy ? It was already difficult to have one ...
Returning to FCO only made matters worse for AZ: you have a good tourist traffic in summer and Christmas at FCO (but these are low-fare passengers who book their tickets well in advance) but little business traffic and virtually no cargo (i.e. empty bellies), especially on LR.
In the meantime, MXP has become a kind of "Gulf" airport, with Gulf airlines having taken over the majority of the Milan area traffic towards Asia and Oceania, whilst European airlines continue to carry Milan area passengers all over the world (not so much to Asia) via their hubs departing from LIN. Last but not least, EZY has a good hub at MXP Terminal 2 (and EZY's European service today is absolutely acceptable, especially in relation to the price paid).
It is now too late for AZ to return to MXP, because the market for AZ is simply not there anymore. I personally will not miss AZ, especially after it tried (it is still trying, actually) to prevent EK from operating the MXP-JFK route: AZ does not invest in MXP (actually, AZ has virtually no flights from MXP) but it does not want other carriers to fly from this airport ! I fear however that the Italian state will avoid AZ's bankruptcy at taxpayers' cost (until the next time ... and the next bailout ... and so on ...)
 
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autothrust
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 12:25 pm

Let AZ die. Since years/decades the airline is in the red. AFAIK since 12 years since being profitable.

Maybe a new airline, better sized (hopefully not fully managed by LH) can turn this.
“Faliure is not an option.”
 
na
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 12:29 pm

Quoting autothrust (Reply 19):
Let AZ die. Since years/decades the airline is in the red. AFAIK since 12 years since being profitable.

Better a painful end than pain without end. Who´s paying for this airline on continuous life support? The public welfare?
 
MOW
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 1:26 pm

Why is everybody under impression that MIL market is bigger and more important than ROM?
ROM is 15% bigger than MIL (MXP LIN included) traffic-wise and is slightly positive in growtn, whereas MIL is seriously negative. In terms of high-yield traffic volume ROM is only 10% behind MIL and also positive unlike MIL.
 
india777
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 2:30 pm

The only right way to change the balance of AZ is to move the intercontinental operations from FCO to MXP, mainly the North American operations, because for the business travelers and also because the flight time MXP to North America is less the the FCO-North America due the polar routes.
Then they have to reduce to the minimum the LIN-FCO-LIN operations and transfer the most important international and national routes to LIN into MXP to help to forward the passenger in the MXP operations worldwide.
From the 1th of October there will be a new daily flight to JFK and will be made by Emirates with a 777-300, this means that there is a market to work on it and to catch!

Ciao a tutti!
 
RGFC
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 2:34 pm

Quoting mow (Reply 21):
Why is everybody under impression that MIL market is bigger and more important than ROM?

It's not only Milan. The Lombardy region is by far the most productive in Italy (and it has a population of almost 10 million people). If you add Piedmont, Veneto and Emilia Romagna, it is still one of the most economically developed areas in Europe. Without a direct competition from LIN (for which Milanese people only have to blame themselves, since it is first and foremost Milanese people that want to keep LIN open, being close to the city and thus easy to use) and other "small" Northern airports (now even Brescia wants to have its own!) MXP could develop into an important European airport even without a hub carrier.

I think instead that no airline can be profitable with (only) FCO as a hub, since FCO is simply not able to attract North Italian and European passengers in sufficient numbers (AZ's intercontinental network from FCO is laughable). AZ's fate is the litmus test of this assertion
 
flyyul
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 4:28 pm

right so alitalia wasn't bleeding when the Intercont flights were at MXP. When the feederagio flights were losing hundreds of millions - while the high yielding flew straight to LIN.
 
Azure
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 5:26 pm

Quoting LAXintl (Thread starter):
Struggling Alitalia has hired investment bank to help tackle a liquidity crisis that may see it running out of cash before the end of the year.

Nothing really new here. CEO G. Del Torchio already announced last July AZ would need € 300 Mi by the end of the year. He did not disclose how the funds would be raised though. It seems it will be done by increasing debt, already at high levels.

Its need in cash increased by € 100 Mi in two months, which may indicate the situation at AZ has deteriorated.

In such a context its aim to break even in 2015 would look like compromised.

AZ is facing a strategic challenge. Its cost base is competitive among the European Legacies but not against the LCCs. Those who claim here that AZ should focus on regional ops only are totally missing the point. AZ cannot compete with FR or U2. Just like LH with Germanwings or IAG with Vueling or AFKL with Transavia, AZ can develop Air One in Europe but this strategy alone will not secure its future. It must develop its long-haul network (Italy has the potential), densify its aircraft "a la KLM" with a less premium heavy fleet, improve the load factor, re-hub FCO efficiently, etc.




Quoting mow (Reply 21):
ROM is 15% bigger than MIL (MXP LIN included) traffic-wise and is slightly positive in growtn, whereas MIL is seriously negative. In terms of high-yield traffic volume ROM is only 10% behind MIL and also positive unlike MIL.

  




Quoting na (Reply 20):
Who´s paying for this airline on continuous life support? The public welfare?

No. The shareholders are. AZ is a privately-owned company.




Quoting mercure1 (Reply 17):
hubing at Malpensa is not feasible as Milan is split into two airports.

  




Quoting AirCanadaA330 (Reply 16):
with the problems at AF, I wonder if they will sell their stake in AZ.


To sell, you need a buyer.
 
blueflyer
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 7:18 pm

Quoting Azure (Reply 25):
To sell, you need a buyer.

Indeed. The banks that exchanged debt for equity in the 2008 bankruptcy are said to be itching to sell their shares as soon as they'll be allowed to. If Alitalia can't make a deal with its investors for additional cash, who is going to want to buy the banks' shares, let alone Air France's?

Air France has no choice but to hold on to its shares unless it wants to write them off, I think.
Recep Tayyip Erdoğan has no clothes.
 
masseybrown
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 7:23 pm

So tired of all the "if we don't get X gazillion by Y date, the sky will fall" stories, but I guess they serve to focus attention.
 
spud757
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 8:49 pm

Quoting Viscount724 (Reply 6):

Lufthansa Italia?   

Time for AZ to pass. Leave domestic and O&D short haul to the LCCs. LH group, IAG, AF/KL, EK etc will handle the long haul sectors
 
miaintl
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 9:16 pm

Cannot AZ become a TK type carrier which focuses on connecting flights to the Mideast and Africa? Can FCO become the skyteam answer to IST?
 
flyyul
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 9:54 pm

AZ needs to focus on long-haul and get into the commodity/leisure traffic business by offering high-density products. I'm sure their longhaul 777 ops with their new density generates returns - why else would Del Torchio want to increase the Longhaul fleet if there was no money being made?
 
Centre
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RE: Alitalia In Cash Crisis

Wed Sep 04, 2013 10:42 pm

Yawn....
What's new?

Quoting flyyul (Reply 30):
AZ needs to focus on long-haul and get into the commodity/leisure traffic business by offering high-density products. I'm sure their longhaul 777 ops with their new density generates returns - why else would Del Torchio want to increase the Longhaul fleet if there was no money being made?

Maybe a new home,a new management, new flight attendandts, new customer service, and a new attitude would help
I have cut 4 times, and it's still short.
 
Viscount724
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RE: Alitalia In Cash Crisis

Thu Sep 05, 2013 12:00 am

Quoting miaintl (Reply 29):
Can FCO become the skyteam answer to IST?

Rome is too far south to make a good hub from the rest of Europe except to Africa.
 
miaintl
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RE: Alitalia In Cash Crisis

Thu Sep 05, 2013 3:46 am

IST is also too far south, but that does not stop from being a major hub.
 
usflyer msp
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RE: Alitalia In Cash Crisis

Thu Sep 05, 2013 4:11 am

Quoting miaintl (Reply 33):
IST is also too far south, but that does not stop from being a major hub.

AZ/FCO does not have the benefit of a booming economy, relatively low labour costs, and a host of government policies designed to promote Rome as a transfer hub like TK/IST do.

A better model for AZ to emulate would be that of TP. Figure out a way to economically serve its local markets well (even if they are largely leisure oriented) and exploit your historic ties to develop a niche long-haul network that few other carriers could realistically break into. AZ could be to North Africa (Libya and Algeria) and the Horn of Africa (Ethiopia, Somalia, Eritrea,) as TP is to Brazil and the other Lusophone countries of the world....
 
Halophila
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RE: Alitalia In Cash Crisis

Thu Sep 05, 2013 4:50 am

Italy will do just fine without AZ. Having had some major SNAFUs with AZ that have left me thousands out of pocket and delayed for days in the past 10 years, I say good riddance. And I would also say I feel sorry for the employees of the airline who may lose their jobs, but frankly both bad experiences have been the result of going "in stretto" (on strike) for better pay, which the AZ employees seem to do on a dime. Sorry to sound negative, but inefficiency breeds inefficiency...
Flown on 707, 717, 727, 732 733 734 735 73G 738 739 741 742 743 744 74SP 757 753 762 763 772 773 77W D10 DC9 M11 M80 M87
 
IndianicWorld
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RE: Alitalia In Cash Crisis

Thu Sep 05, 2013 6:27 am

Quoting usflyer msp (Reply 34):
A better model for AZ to emulate would be that of TP. Figure out a way to economically serve its local markets well (even if they are largely leisure oriented) and exploit your historic ties to develop a niche long-haul network that few other carriers could realistically break into. AZ could be to North Africa (Libya and Algeria) and the Horn of Africa (Ethiopia, Somalia, Eritrea,) as TP is to Brazil and the other Lusophone countries of the world....

I don't think Italy really has the levels of linkage as TP can gain from its markets.When I look at those options, Brazil has been a great boost for TP, given its economic rise over the past decade, which has helped it greatly in its efforts to strengthen its market position.

AZ has over the years been a global carrier, flying to far flung places (ie. MEL/SYD) in search of supporting the Italian diaspora, although unfortunately this was not a viable way forward. Trying to tap into the links it can in Africa may well be a struggle too.

Quoting usflyer msp (Reply 34):
AZ/FCO does not have the benefit of a booming economy, relatively low labour costs, and a host of government policies designed to promote Rome as a transfer hub like TK/IST do.

All valid points.
 
RGFC
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RE: Alitalia In Cash Crisis

Thu Sep 05, 2013 8:09 am

Save for a brief period when AZ had its main airport at MXP (but many flights and all personnel were left at FCO), AZ has always had its hub at FCO and it has never worked, since AZ has always failed to attract an adequate number of passengers from Northern Italy (let alone Europe!), whilst local demand is not sufficient to sustain a hub: I don't understand why this strategy (i.e. hub at FCO) should work now (and in fact it is not working), when there is fiercer competition than in the past. The only difference is that in the past AZ was a state-owned airline that was "allowed" to lose money, and therefore it didn't really matter if FCO didn't work as hub
 
na
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RE: Alitalia In Cash Crisis

Thu Sep 05, 2013 8:37 am

Who the hell is backing this money drain? To dump state aid into a company over such a long period is illegal in the EU, and no bank will support such a hopeless creditor if there isnt a backdoor. To whats the trick?
 
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autothrust
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RE: Alitalia In Cash Crisis

Thu Sep 05, 2013 11:45 am

Quoting Viscount724 (Reply 6):
Agree. Switzerland is doing just fine without Swissair

Disagree strongly , now Lufthansa controls everything and tells LX what to do , even what planes they have to buy or will get.

Many people inside LX are not happy about the German Style of doing business and how many high ranking jobs got lost to germans.

The overall quality has also declined.
“Faliure is not an option.”
 
IndianicWorld
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RE: Alitalia In Cash Crisis

Thu Sep 05, 2013 12:01 pm

^^ From my dealings with Swiss and German businesses, I found some linkages in their style and thinking.They certainly aren't at polar differences in their management styles that's for sure.

The current Swiss operation is well run and doing fairly well financially. This is a big step up from the nature of the management (mismanagement) of the latter point in SR's history, especially the buying spree that it embarked on (Qualifyer Alliance anyone??).

Whether it be majority German or Swiss controlled, Switzerland has a global airline based in its country and with thousands of employees in a job thanks to the airlines success.

AZ could only dream to be in that position right now.
 
na
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RE: Alitalia In Cash Crisis

Thu Sep 05, 2013 12:08 pm

Quoting autothrust (Reply 39):
Many people inside LX are not happy about the German Style of doing business and how many high ranking jobs got lost to germans.

No one is really happy if the rich uncle from abroad takes over. Thats not a LH vs. Swiss problem. I see that in the end both are doing rather fine together. Lets be honest, without LH many of those who are whining now would be without a job.

Quoting IndianicWorld (Reply 40):
The current Swiss operation is well run and doing fairly well financially. This is a big step up from the nature of the management (mismanagement) of the latter point in SR's history, especially the buying spree that it embarked on (Qualifyer Alliance anyone??).

Right.

Quoting IndianicWorld (Reply 40):
AZ could only dream to be in that position right now.

Sure, but who so stupid to invest in this money grave? Let them die, the agony lasts much too long. All said, AZ employees are partly living from the public welfare, only at higher wages. That is ok for 2 or 3 years, but AZ is a hopeless case, even the blindest politician should be able to see that.
 
IndianicWorld
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RE: Alitalia In Cash Crisis

Thu Sep 05, 2013 12:15 pm

^^ Fully agree. I certainly wasn't advocating for AZ to be a great investment.

I think the only way forward will be for tough decisions to be made and that may well need drastic action like seen at Swiss. The last attempt to transform AZ didn't work so let's wait and see what comes of this. One thing is for sure, it will likely get messy.
 
vv701
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RE: Alitalia In Cash Crisis

Thu Sep 05, 2013 12:22 pm

Quoting miaintl (Reply 33):
IST is also too far south

IST is close to the CDG-DXB great circle route and DXB has already more than proved itself as a hub between Europe and the Indian sub-continent, the Far East and Australasia. No part of Italy lies under that great circle route that crosses southern Germany, Austria, Serbia, Bulgaria and, of course, Turkey.

FCO is close to the great circle route between CDG and DAR. It is therefore well positioned as a hub to Africa but, compared to IST, is too far south for the majority of destinations served by the well established DXB or the developing IST hubs.

Personally the only time I have used FCO as a hub was when routing LHR-FCO-CAI. I unfortunately used AZ. Even though it turned out that both flights were consecutive flights operated by the very same aircraft, at check-in at LHR AZ refused to check my baggage to CAI. I had to collect it and re-check it at FCO. Thus, at least in my eyes, AZ eliminated any thoughts I may of had of using FCO as a hub again. If this experience was not isolated then it is one of the reasons why AZ management has failed to turn AZ round.
 
miaintl
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RE: Alitalia In Cash Crisis

Thu Sep 05, 2013 4:11 pm

Is it to late for AZ to move its hub operations to MXP now?
 
mercure1
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RE: Alitalia In Cash Crisis

Thu Sep 05, 2013 4:29 pm

Quoting miaintl (Reply 44):
Is it to late for AZ to move its hub operations to MXP now?

Moving the hub to MXP will only replicate the previous disaster.

With Linate being the primary domestic and Europe airport of choice for Milan, AZ would be hard pressed to get people to utilize MXP for such flying. Result would be like last time, they would have to discount fares out of MXP compared to LIN, or hope to fill enough lower yield connection flow traffic to support the volume of flights needed to make a hub function. Either way its not a good result financially at the end.

Atleast with FCO, they have everything under 1-roof, at a single airport which they can call a hub.
 
RGFC
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RE: Alitalia In Cash Crisis

Thu Sep 05, 2013 4:42 pm

Quoting miaintl (Reply 44):
Is it to late for AZ to move its hub operations to MXP now?

AZ will never move back to MXP since (i) it is a "Roman" company and it is "politically" obliged to remain at FCO (when it moved to MXP, it was more a pretence than a real move); (ii) AF, which de facto controls AZ from an operational point of view, doesn't want MXP to develop, since it is a competitor of CDG and AMS: AF/KL have in fact moved from MXP to LIN ALL of their flights to CDG and AMS, with the intent of siphoning passengers of the Milan area, bringing them to their hubs and from there around the world (BA and LH substantially do the same, though they have flights also at MXP: logically everyone follows its interests); (iii) in any case, a move to MXP would be successful only if LIN were closed or at least substantially curtailed, but this will never occur also due to shortsighted Milanese people who prefer to have a (really bad) airport ("landing strip" would be a more appropriate term) close to the city rather than a "true" airport (MXP), which is certainly farther but which, if properly exploited, could become an important player in the European scenario.
 
miaintl
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RE: Alitalia In Cash Crisis

Thu Sep 05, 2013 7:56 pm

But would not a MXP hub compliment CDG and AMS instead of stealing passengers from them? Would it not strengthen the skyteam alliance if they have a strong central European hub in MXP? Why would AF possibly be against that?
 
LAXintl
Topic Author
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RE: Alitalia In Cash Crisis

Thu Sep 05, 2013 8:50 pm

Quoting miaintl (Reply 29):
Cannot AZ become a TK type carrier which focuses on connecting flights to the Mideast and Africa? Can FCO become the skyteam answer to IST?

Problem is, AZ is no TK.

TK for all purposes is a LCC when it comes to cost. Per a investor presentation its cost base is only 60% of AEA member airline averages. Also TK has lots of other benefits including a strong and upcoming home market with high market share compared to stagnant Italy, and also enjoy great national support from a nation that is looking to grow and support the airline sector.

At the end, TK can cover flying on much less revenue than what AZ gets.

Quoting miaintl (Reply 44):
Is it to late for AZ to move its hub operations to MXP now?

Been there, done that.

Result was also massive losses.

Quoting miaintl (Reply 47):

But would not a MXP hub compliment CDG and AMS instead of stealing passengers from them? Would it not strengthen the skyteam alliance if they have a strong central European hub in MXP? Why would AF possibly be against that?

Sure for Skyteam a Milan hub might look interesting, but the realities of two (3 if you count LCC BGY) airports, makes the proposal not a viable one for AZ to execute on.
From the desert to the sea, to all of Southern California
 
miaintl
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RE: Alitalia In Cash Crisis

Fri Sep 06, 2013 2:04 am

Then whats your solution for AZ, if you even have any? An FCO hub is not profitable either.

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