The new populist Italian government is talking about taking a 15% stake in a relaunched Alitalia. Apparently, Italian lawmakers haved looked at the French government’s involvement with Air France as inspiration for its plan for the heavy financial investment in Alitalia – because that has clearly worked out so well for the French.
“If France has 14.3 per cent of Air France … we can imagine a similar level of participation (in Alitalia),” Italian Prime Minister Luigi Di Maio said on Friday – the investment would set the Italian taxpayer back something in the region of €2 billion ($2.3 billion USD).
But Di Maio did add a very important caveat – Alitalia would first need to “purify itself of everything that has not worked until now.” Di Maio didn’t offer an explanation of what he meant by that but Alitalia’s bureaucratic working practices could well fall under the spotlight once again.
Of course, this isn’t the first time a potential investor has promised to change Alitalia’s culture and get the airline back into the black (the flag carrier has only once turned a profit – and that was back in 1998). The Etihad Airways group of Abu Dhabi, who had taken a 49% equity stake in Alitalia, spectacularly pulled the plug on the airline last May, sending the airline into bankruptcy.
At the time, Etihad said it had “done all we could to support Alitalia,” explaining that the airline required “fundamental and far-reaching restructuring to survive and grow in the future.”
Luckily for Alitalia, the Italian government came to the rescue with a €600 million bridge loan to keep the airline flying while potential suitors were lined up. A further €300 million in emergency funding was only recently approved due to delays in the sell-off of Alitalia.
So far, a number of investors have shown interest in Alitalia – amongst them are big airline brands such as Lufthansa and easyJet. More recently, Delta Air Lines and even China Eastern have been rumoured to be considering putting an offer in on Alitalia – although only if they can secure the airline on their own terms.
The sell-off was delayed due to national elections in Italy and the appointment of a new government – although it’s unclear whether Alitalia has done much to ready itself for new ownership in the last year and a half.
Certainly, there’s always been a certain attitude that the Italian’s will never let Alitalia fail – no matter how badly it performs. It’s too important for both national pride and also national security. Which to a certain extent explains why the Di Maio government would be interested in securing a stake in the new Alitalia.
The sell-off is expected in the next few months – although, it’s already been put off once and could easily be delayed again. For now, Alitalia is the bankrupt airline which continues to fly, losing money day-in day-out but secure in the knowledge the Italian taxpayer will continue to pay the bills.
