Alitalia faces bankruptcy after employees vote down plan
The risk of bankruptcy looms for Italy’s flagship airline, Alitalia, after employees resoundingly rejected proposed salary cuts and layoffs that were aimed at securing investments and keeping the carrier afloat.
It’s the latest twist in the decades-long saga of decline for the loss-making company, which has been through multiple bailouts and restructurings, but never managed to compete with the booming lowcost carriers in Europe.
Alitalia said Tuesday its board concluded that in light of the employees’ vote on Monday, it has decided to “begin procedures foreseen by law,” a reference to extraordinary administration. The board will meet Thursday to discuss the move.
Such a scenario could result in shedding unprofitable routes, most likely predominantly domestic ones, to competitors, and selling off aircraft to help pay creditors.
It was unclear if the Italian government might try to convince European Union officials to allow a “bridge loan” for Alitalia to ease the crisis.
In a statement, Alitalia’s board said it had “taken note with regret” of the rejection of the cost-cutting plan, whose aim was to open the way for investment, including more than 900 million euros (about US$1 billion) in new financing.
“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,” said James Hogan, the airline’s vice-chairman and president and CEO of Etihad Aviation Group, Alitalia’s biggest minority shareholder.
Hogan noted Etihad had poured in “vast amounts of financial and commercial support during the past three years” and had reaffirmed “its strong commitment and principal willingness to support the airline with a package worth nearly 2 billion euros (US$2.2 billion) in aggregate to help fund Alitalia’s new five-year business plan.”