Uncertainty over Alitalia’s routes from London Heathrow as it enters administration

Alitalia Airbus A320
Alitalia Airbus A320

As has been widely reported, today (Tuesday 2 May 2017) the shareholders of Alitalia (one of whom is Etihad) decided to put the airline into a formal administration process with the Italian Ministry of Economic Development.

This follows a decision by members of Alitalia’s trade unions not to accept a restructuring proposal which would have involved, inter alia, cuts to jobs and staff salaries and a restructuring of its short-haul operations. Had the restructuring plan been approved the shareholders would have provided new finance to the airline.

Under the administration process, the Italian Ministry of Economic Development will appoint a Commissioner which will manage the airline whilst it is in administration.

The Italian Government has approved the provision of a bridge loan which will allow Alitalia to continue operations for the foreseeable future.

If a buyer for Alitalia is found then Alitalia could continue in some form. However, a question will remain over its London Heathrow slots.

When Etihad acquired a stake in Alitalia in 2014, it bought all of its London Heathrow slots. These were valued at €60m. These are currently leased to Alitalia which uses them to operate five flights from London Heathrow to Milan Linate and Rome Fiumicino. (By comparison BA flies to Milan and Rome up to 10 and 6 times a day.) Whilst the precise terms are obviously commercially confidential it seems likely that these will revert back to Etihad at some point after Alitalia enters into administration.

Given that Scandinavian Airlines recently sold two London Heathrow slot pairs to American Airlines for $75million, Etihad could recoup some of its losses by selling them to other airlines or to expand its own network from London to Abu Dhabi. Either way, it is unlikely they will remain with Alitalia.

For further news on Alitalia’s situation we recommend checking Alitalia’s corporate website and the English language website of Italian newspaper Il Sole 24 Ore.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s