Alitalia took steps today to protect its operations, filing for bankruptcy protection in the United States. The move was motivated by unpaid bills and a need to protect the operations. The filings suggest that the operator of JFK Terminal 1 was set to block the airline’s operations. So are telephone and internet service providers, placing the call center operations at risk.
In the filing Alitalia also indicates that 30% of its total revenue comes from US operations. Half of that – 15% of global revenue – comes from the handful of daily flights at JFK. That number is astounding to me.
Yes, it includes feed to or from regional flights in Europe, flights that face massive competition from other airlines in Europe and which drive local fares down significantly. But it is still incredible that one destination of nearly 100 in the route network can be so critical to the revenue of the company. Or that the one destination (on three daily flights) matches the revenue of the four other active US destinations.
Alitalia: Choosing suicide over sacrifice
The carrier is working to restructure more than $3bn in debt and can no longer depend on cash infusions from Etihad Airways. The Etihad stake stands at 49% but no further cash will come without concessions by the employees. A recent effort to realize those compromises – job and salary cuts – failed ratification by the unions. There are also questions around the legality of further funding from the government with respect to EU rules around bailouts and maintaining a fair competitive environment.
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you get the feeling that AZ isn’t long for this world/
Sure, but I’ve had that feeling for a long time and it keeps proving me wrong. Maybe this time is different.
So the judge only granted a 10 day temporary restraining order with a hearing set for June 26th. What does that mean after the order expires?
As bad as I feel for the employees and those who will be inconvenienced by all of this – now is a good time for Alitalia to go under and everyone can move on since the airline for years have not been able to right the ship.
The 10 day timing is based on expectation of a hearing before then with further rulings expected.
We will see what happens from there.
So… has Alitalia’s previous help by the Italian government a classic case of “government bailouts” that US and European airlines are so against? Does Delta still partner with Alitalia?
Yes and yes.