Alitalia

[sfocruiser]

Unfortunately, he's probably not well versed in the history of the airline and the politics of the EU! :D

 

Any bailout of Alitalia by the Italian government would almost certainly be totally illegal. That's the main constraint within which everyone is working, and why it's proving so hard to find anyone to "save" the airline.

 

 

I would concur. The National Flag carriers of Belgium and the Swiss went belly up without much fanfare.. and in this case the Govt. is not allowed by the EU to bail it out.

[lb0103]

Has anyone got any new info on this?

 

We are booked for Oct. and hope it is settled either way by then.

[sfocruiser]

Has anyone got any new info on this?

 

We are booked for Oct. and hope it is settled either way by then.

 

The new PM Berlusconi stated that there is a consortium of Italian businessmen interested in bailing out the airline. no hard details.

 

 

http://www.iht.com/articles/ap/2008/04/23/business/EU-FIN-Italy-Alitalia.php

[nolaAlive]

Alitalia is being given (I'm not sure they will ever repay) $500 million by the government:

http://www.theaustralian.news.com.au/story/0,25197,23592665-26040,00.html

 

They will be mothballing some planes:

http://www.forbes.com/markets/feeds/afx/2008/04/24/afx4929184.html

 

I'm still planning on a July 1st flight on Alitalia, but also have insurance to cover the just in case scenarios.

[keltic]

The subsidy is ilegal. It doesn´t matter what the italian goverment does, it´s against the EU rules. And I find it fair. If the rest of the airlines had to have profits with no statal aids........why not Alitalia?.

 

If it collapses, many airlines will fill the space.

[nolaAlive]

The subsidy is ilegal. It doesn´t matter what the italian goverment does, it´s against the EU rules. And I find it fair. If the rest of the airlines had to have profits with no statal aids........why not Alitalia?.

 

If it collapses, many airlines will fill the space.

 

Some podunk airline has challenged, but loans are not illegal.

[sfocruiser]

Some podunk airline has challenged, but loans are not illegal..

 

Actually in many cases they are, especially if they are percieved as aid and not loans. And the podunk airline is Ryanair, not a minor player.

 

The Italian Government has authorized a €300 bridge loan to continue operations (which has to be paid back this year). According to the artucle the EU is investigating if the loan is legal. Here is the link and an excerpt below

 

The good new for flyers this summer is as this is a government review it will take a while. So the airline should have some time.

 

http://www.nytimes.com/2008/04/24/business/worldbusiness/24alitalia-web.html?_r=1&ref=worldbusiness&oref=slogin

 

...even if a loan is on commercial terms, it could constitute illegal aid if it was granted in circumstances where normal banks would decline to lend, he said.

 

Should Italy fail in its bid to bail out Alitalia, analysts said the airline would probably soon be faced with liquidation. But even then, the carrier has very few assets of value to sell. Its fleet of mostly decades-old, fuel-guzzling aircraft would probably not draw much interest from other airlines, while its landing rights in Rome, Milan and other foreign airports would be unlikely to sell for much in the event of a forced sale.

 

Alitalia has been in a slow death spiral for more than a decade, posting a profit only four times in the last 15 years. Its share of the Italian air travel market has fallen to around 30 percent from more than 80 percent in the late 1990s amid competition from discount carriers.

[nolaAlive]

Actually in many cases they are, especially if they are percieved as aid and not loans. And the podunk airline is Ryanair, not a minor player.

 

Yes, I know. And loans are legal.

 

The good new for flyers this summer is as this is a government review it will take a while. So the airline should have some time.

 

Which is what I am counting on.

 

Alitalia is mothballing 37 planes, so some of the gas guzzlers are bound to be in that number,

[Globaliser]

Has anyone got any new info on this?

There's a lot of information on the main Alitalia thread in the Cruise Air forum.

 

In short, Air France has finally announced that it has withdrawn its bid for Alitalia now that Berlusconi has, as expected, won the election. (I suspect that Air France's timing was out of respect for the Pope, who travelled to and from the US on an Alitalia aircraft.)

 

The outgoing government has lent Alitalia €300 million, at Berlusconi's request. This must be repaid by the end of the year. Berlusconi claims that a consortium of Italian investors is putting together a bid for the airline, but this may take five weeks to materialise.

 

The European Commission is urgently looking into the question whether the loan is illegal.

 

Aeroflot is waiting for an invitation from the Italian government to enter the bidding.

 

And the Italian civil aviation authority is meeting Alitalia twice in the next two weeks to determine whether its licence to fly should now be revoked on safety grounds.

And loans are legal.

Not so. As sfocruiser rightly says, a government loan to Alitalia may very well be completely illegal.

 

The Commission has warned about this over and over again in the last few weeks, yet the Italian government has gone ahead and done it anyway.

[sfocruiser]

Yes, I know. And loans are legal.

 

Again, not all loans are legal. See the excerpt below form the EU commission. Lufthansa and Finnair have joined with Ryanair to ask the Commission to investigate.

 

“We need a clear picture,” the European Commission spokesman for transport, Michele Cercone, said. There were “a number of doubts” and the Italian authorities needed to provide “more clarification.”

In addition, even if a loan is on commercial terms, it could constitute illegal aid if it was granted in circumstances where normal banks would decline to lend, he said."

 

Here is the statement from Finnair

 

Finnair does not approve of the 300 million euro loan given to Alitalia by the Italian government.

 

“The loan is yet another link in a chain of subsidies that has been going on for years whereby the Italian government, against the EU’s explicit forbiddance, pumps money in to an ailing national airline,” states Finnair President and CEO Jukka Hienonen.

 

Realistically the Alitalia will get the funds, as the Commission as with most bureaucratic agencies tend to bark more than they bite. The last time this happened in 2004 seven of the Major european carriers opposed the loan and nothing was done.

 

With the airline losing about €45M a month the bridge funding should keep the airline on its feet for a while.

[Globaliser]

With the airline losing about €45M a month the bridge funding should keep the airline on its feet for a while.

Though there are reports that its cash burn is about twice its accounting loss, ie in the region of €3 million or €3.5 million per day.

 

That is likely only to accelerate as the dying swan effect takes hold, and future passengers begin to book away from the airline because of the uncertainty about the future. Those who already hold tickets, of course, don't have the choice and are subject to the agony of waiting to see what the future will bring.

 

And we will have to see what ENAC will do about its licence.

[sfocruiser]

Though there are reports that its cash burn is about twice its accounting loss, ie in the region of €3 million or €3.5 million per day.

 

losing €3 million or €3.5 million per day? ouch... Hopefully the funds will keep her afloat for the summer season. T

[CruzinFamilyof5]

I just purchased Travel Guard and noticed when comparing plans that one of them had Alitalia and others on a list of airlines not being covered.

 

 

...

[nolaAlive]

There seems to be no lack of Alitalia alarmists on the thread.

 

For the alarmists: No doubt, you are not booked on Alitalia. Please correct me if I am wrong.

 

I am not looking for reasons why it will fail. There is nothing new in that information. It is also not up to you to determine if the loan is legal or not. I am not aware of any country where illegal subsidies are possible, where they do not, in fact, exist.

[CruzinFamilyof5]

We had no idea Alitalia was having these problems and we were considering purchasing airfare for 5 from LAX to Barcelona for a cruise on Dec. 21. They offered great entertainment for kids on their flights. I'm so thankful for this board, that we switched to Swiss Air (actually the price dropped by $1000 for leaving a day earlier). Otherwise, Alitalia would have been our 2nd choice had we not advised that Alitalia was having financial problems under the "Cruise Air" section.

 

When purchasing Travel Insurance for our first time (due the fact that this is a major trip for us and so far ahead), none of the agents mentioned that certain airlines and/or tour operators were excluded. I found the list after I purchased the insurance.

 

Travelex Special Notices

 

Travel Guard Travel Alerts

 

I can't imagine planning so far ahead and showing up at LAX a few days before Christmas, scrambling to purchase emergency air on different airline so that we don't miss our "cruise of a lifetime" 1/2 way across the globe! Thanks so much to this board for all the recommendations and being forwarned on all issues concerning traveling.

 

 

...

[Host Karen]

There's a lot of information on the main Alitalia thread in the Cruise Air forum.

 

As Globaliser points out, there is a thread on this subject on the Cruise Air forum. I recommend anyone concerned about this issue read and post any further comments on that thread. This one is closed.

 

Karen

HostKaren@CruiseCritic.com