Alitalia nears Bankruptcy

[Guest]

Alitalia nears bankruptcy as staff rejects rescue plan

Apr 25, 2017 Alan Dron 

Rob Finlayson

 

Italy’s national airline Alitalia has been plunged into crisis after staff refused to back a rescue plan proposed by shareholders and banks.

The 11,400-strong workforce had to agree to a new package of cuts, including some 980 redundancies and an 8% pay cut for flight deck and cabin crew members, for a €2 billion ($2.2 billion) recapitalization package to go ahead.

However, staff in the perennially loss-making airline voted 67% against the proposal.

Alitalia now faces the possibility of being placed in “extraordinary administration”—a similar procedure to the US Chapter 11 bankruptcy process whereby a company is granted protection from creditors to give it time to reorganize financially. This would involve the Ministry for Economic Development appointing an administrator to thrash out a restructuring plan within 180 days.

Alternatively, the 70-year-old company could face liquidation, if the administrator’s plans are rejected by the government.

Shareholders, notably Abu Dhabi-based Etihad Airways, which took a 49% stake in Alitalia in 2014, expressed dismay at events. Shareholders will meet April 27 to discuss available options.

Alitalia spokesmen were not available April 25 to comment on the situation. Italian media reports suggested the airline’s workers were banking on the Italian government finding some way to bail out the flag carrier again.

In a brief statement, Alitalia said its board “took note with regret of the decision of the workforce to not approve the pre-agreement signed on April 14 between the company and the unions. The approval of the agreement would have unlocked €2 billion of recapitalization, including more than €900 million of new finance,” the company said. “Given the impossibility to proceed with the recapitalization, the board has decided to start preparing the procedures provided by the law and has convened a shareholders’ meeting on April 27 to deliberate on their implementation.”

In a strongly worded statement, Etihad Aviation Group’s president and CEO James Hogan said the workers’ decision put Alitalia at risk.

“We deeply regret the Alitalia staff vote outcome, which means that all parties will lose: Alitalia’s employees, its customers and its shareholders, and ultimately also Italy, for which Alitalia is an ambassador all over the world,” Hogan said. “Alitalia’s shareholders, including Etihad Airways, have provided vast amounts of financial and commercial support during the past three years. Jointly with the Italian shareholders, Etihad had reaffirmed its strong commitment and principal willingness to support the airline with a package worth nearly €2 billion in aggregate to help fund Alitalia’s new five-year business plan.”

Hogan continued, “A key condition to this commitment was that an agreed and concerted effort would be made by all interested parties, including the unions. The preliminary agreement with unions that was made possible and supported by the union leaders, Alitalia management, the Italian prime minister and three government ministers would have helped secure Alitalia’s future. The rejection of this agreement in the staff ballot is deeply disappointing.” 

[Guest]

Wednesday, 26 April 2017 | MYT 8:50 PM

 

Malaysia Airlines offers to lease A330s from Alitalia

Bellew says Malaysia Airlines could take between six and eight Airbus A330s from Alitalia.

DUBAI: Malaysia Airlines has offered to lease Airbus A330 jets from Alitalia if the struggling Italian airline is wound up, the Asian carrier’s chief executive told Reuters on Wednesday.
Alitalia is preparing for special administration proceedings after workers rejected its latest rescue plan, making it impossible for the loss-making airline to secure funds to keep its aircraft flying. Workers are hoping the Italian government will step in with an alternative rescue deal.
Malaysia Airlines could take between six and eight Airbus A330s from Alitalia, CEO Peter Bellew told Reuters in Dubai.
An Alitalia spokesman declined to comment.

Malaysia Airlines is emerging from a turnaround after twin tragedies since 2014, when flight MH370 disappeared in what remains a mystery, and flight MH17 was shot down over eastern Ukraine.
Its load factors - or how full its planes are - averaged around 80% in the three months to March 31, Bellew said.
Malaysia Airlines wants to lease between six and eight A330s or Boeing 777s for use from 2018 and a further seven to nine for 2019, he said.
This is an increase on the six for 2018 and six for 2019 he told Reuters last month he was interested in.
“The world really is awash right now” with large aircraft, Bellew said. “There are really good deals out there at the moment. It’s a buyer’s market right now.”
Bellew also said he planned to make a decision on an order for 30-35 new Airbus A330neo or Boeing 787-9 widebody planes in the next four to six months to replace its A330s from the end of 2019.
“If the prices are good ... we will do an order,” he said. “But if the price isn’t right, we won’t do it.” - Reuters

Read more at http://www.thestar.com.my/business/business-news/2017/04/26/malaysia-airlines-offers-to-lease-a330s-from-alitalia/#GwL5Lzt54WBtk8HH.99

[acsidestick]

This is exciting news,  it means Alitalia has climbed up from severe deficits to almost reaching break-even bankruptcy.  Next step, make a small profit.

[Guest]

Alitalia: Italy's national airline to file for administration as turnaround plan fails

Alitalia, whose major shareholders are Abu-Dhabi based Etihad Airways and Italian banks, last week said it had exhausted all options to stay solvent 

• Tommaso Ebhardt, Chiara Albanese
•  Alitalia, which has 12,500 employees, has been stumbling in the wake of a previous bankruptcy in 2008 Reuters

Alitalia started bankruptcy proceedings for the second time in a decade after workers rejected job cuts and concessions linked to a €2bn ($2.2bn) recapitalisation plan aimed at salvaging the cash-strapped Italian airline.

Shareholders voted unanimously to file for special administration, the carrier said in a statement following a meeting on Tuesday. Under Italian law, the government will have to provide stop-gap funds to maintain operations and will appoint supervisors to turn around the carrier or order its liquidation.

With the move, the board of directors have “acknowledged the serious economic and financial situation of the company,” the company said in the statement.

• Read more

Alitalia workers put pressure on Italian government to save airline

The administrators will take over the business and present a new strategy that may entail asset sales, reduced operations and job cuts aimed at making the airline viable within two years. If a turnaround isn’t possible the administrators may order the carrier to be liquidated.

Alitalia, whose major shareholders are Abu-Dhabi based Etihad Airways and Italian banks, last week said it had exhausted all options to stay solvent after workers nixed a recapitalisation plan involving 1,600 job cuts. Alitalia, which has 12,500 employees, has been stumbling in the wake of a previous bankruptcy

Italian finance minister Pier Carlo Padoan said last week that the government will not pump more cash into boosting the airline’s capital.

Alitalia is “a private company” and its fate is “in the hands of shareholders and management," Mr Padoan told lawmakers in Rome on Thursday. Economic Development Minister Carlo Calenda on 30 April said he hopes the carrier can be sold as "a whole, not in pieces."

Shrinking Share

Alitalia’s years of underperformance have diminished its standing within the Italian economy and the aviation industry. Carrier’s share of the Italian market slumped to 18 per cent as of 2015 from 23 per cent in 2007, according to an analysis by Ugo Arrigo and Andra Giuricin of Milan Bicocca University.

The Italian airline had a net loss of €199m in 2015, the last year for which it has published figures. The carrier had lost almost €3bn since it emerged from bankruptcy in 2009, the study shows.

The special administrators will have 180 days to come up with a new plan, with a possible extension of 90 days. The process, available for large insolvent companies, is aimed at protecting a company’s assets and workers through reorganisation.

Bloomberg