The new Alitalia could leave SkyTeam, join Star Alliance

With €3bn of Govt funding, a newly-nationalised Alitalia is set to launch in June.

By David Flynn, May 11 2020
The new Alitalia could leave SkyTeam, join Star Alliance

Perennially-troubled Italian flagship airline Alitalia would soar again under state ownership, backed by €3 billion of government funding, and leave SkyTeam for the arms of Star Alliance, according to reports.

The long-ailing carrier will be nationalised from June 2020 and "focus strongly on long-haul routes, also with new transatlantic alliances,” Industry Minister Stefano Patuanelli said on Thursday.

The government is also considering switching Alitalia’s partnership to Lufthansa and Star Alliance, abandoning a current tie-up with Delta Air Lines  and SkyTeam, newspaper Il Sole 24 Ore reported.

Star Alliance's transatlantic joint venture currently includes Air Canada, Lufthansa Group airlines and United Airlines.

The new Alitalia will focus on long-range and trans-Atlantic routes.
The new Alitalia will focus on long-range and trans-Atlantic routes.

Patuanelli has said "the new Alitalia will start with a fleet of more than 90 aircraft compared with its current 113 airplanes," but stressed the €3 billion injection was "not another rescue. This is the company's relaunch."

Alitalia has received more than €7 billion from the Italian state over the last decade, along with a €560 million investment from Etihad Airways which saw the Gulf carrier take a 49% stake in the airline.

It had already struggled through three failed restructuring attempts over the past decade, and has been run by state-appointed administrators since May 2017 when it entered bankruptcy protection, facing US$3.3 billion of debt.

Italy, the Euro area’s third-biggest economy, has been under a national lockdown since early March to counter the spread of the coronavirus. Flight cancellations across Europe have badly hurt airlines as revenue craters.

Patuanelli said that as a nationalised state-backed airline, Alitalia  "will kick off in the same position as other airlines once the sector restarts." 

Additional material by Bloomberg News

This article is published under license from Bloomberg Media: the original article can be viewed here

David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

Virgin Australia - Velocity Rewards

05 Sep 2013

Total posts 54

Fingers crossed that this works for Alitalia. Unfortunately, I don't think this strategy will work without an investment from the Lufthansa group.

In regard to joining Star Alliance: it could work, nonetheless, it would surprise me if another Star Alliance airline vetos Alitalia joining; or; Star Alliance could imposes some strong condition prior to Alitalia joining the alliance.

In regards to joining transatlantic joint venture: It would be a long shot. Other Star Alliance airlines have tried to join the joint venture (Lot Polish Airline and SAS). The only beneficiary of Alitalia joining the transatlantic joint venture is Alitalia. Lufthansa Group, United & Air Canada would see very little benefit with Alitalia joining and sharing their revenue.

Long-haul routes strategy: where would they fly beside transatlantic? Generally, the home countries citizen will use the home countries airline. So where do Italians want to travel to and can Alitalia compete? Alitalia would need to have a major push to get corporate contacts for there long hall operation to be successful. Politicians in Italy have tried to push Alitalia to fly more towards China and Asia but short term I don't think many Italians would want to travel to Asia due to Covid-19. Plus I don't think that many people on the other end would choose Alitalia. China and Asia are strongly patriotic and I don't think Alitalia could compete on cost either.

Short hall network: would need to complement long hall operations but that might mean that it will probably not be able to get the same aircraft utilisation as a low cost carrier who are growing rapidly in Italy. This could limit the appeal to price sensitive travellers and leisure travelers.

Thought spot for Alitalia but if this strategy doesn't work after 9 billion euros it might need to be broken up to avoid more taxpayer bailouts.

Qantas - Qantas Frequent Flyer

11 Nov 2015

Total posts 41

Making hard calls is never easy.

Delta Air Lines - SkyMiles

14 Apr 2013

Total posts 333

With rumours circulating that IAG may be looking at investing or possibly purchasing OS from Lufthansa Group, I think AZ should also consider joining onworld. I would further strengthen the alliance in Europe balance out star alliance's strong hold.

16 Jan 2018

Total posts 108

Alitalia, while from a country with Europe's3rd largest economy, is part of a group of carriers that is Tier 2. Let's be realistic, they have a reasonable product, but they wouldn't if it wasn't for Etihad. They need to look at going into a hybrid model combining LCC and full service models. This has worked for every other carrier and has actually seen increase in revenue. Charge for different fare types with different inclusions and if anyone wants to add extras then they can pay for them. Pick destinations for leisure travel that you can service 2-3x a week on a seasonal basis and tie it up with cities for better connections. For example US flights from most EU cities leave before 10am, how about a later departure in the day? Flights to Bali (KL, AF, GA, MH, CX, QR, EK), Malaysia (MH, BA, EK, QR, KL, AF), destinations that aren't being covered by *A direct from Europe, get into a JV with SQ and there you go - obviously not that easy but the idea is there.

Etihad - Etihad Guest

19 Mar 2018

Total posts 62

Alitalia needs to go full premium and milk Italy for what its worth.

I don't understand why Alitalia's catering isn't being praised to the skies, like, if Singapore Airlines can make lobster thermidor their thing and ANA can make Japanese food their thing, why isn't Alitalia renowned for their pizzas and pasta. I also don't understand why their cabin and products aren't designed by Porsche Design or Pinafarina, with amenity kits or whatever by Versace or Prada.

Ditto Iberia.

Alitalia is being utterly wasted by SkyTeam. Alitalia has potential to be the Lufthansa Group of Southern Europe, potentially being the holding management of Air Malta, Croatia Airlines, Aegean Airlines, Air Serbia, Air Algerie and Trenitalia, which could be the way into acquiring NTV and DB..

Star Alliance also has a lot of clout international business and commerce, and Italy itself attracts a lot of Middle East interest, so Alitalia could be the key to attracting Middle East customers as an emerging market. The presence of NEOS and Blue Panorama also demonstrates an emerging outbound leisure market ready to travel. A lot of potential.

Qantas - Qantas Frequent Flyer

21 Jul 2014

Total posts 18

This is one of the most unintentionally funny articles I have read in a while. "not another rescue. This is the company's relaunch." Oh please. Anyway nothing will change internally because the weakness for Alitalia (and Air France) remains the unions who are super bolshy. I am not anti-union, but anyone who has had the fun of flying Alitalia knows what it's like to have suddenly and inexplicably cancelled flights. I go to Italy for business every year and love it dearly, but god help never with Alitalia ever again. I once drove from Ancona (East coast) to Rome rather than risk Alitalia. And ever since I take the train or come with Lufthansa via Munich.


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