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.
A number of trade unions representing employees of Alitalia are due to take industrial action on Wednesday 5 April 2017.
As a consequence, a substantial number of flights have been cancelled on Wednesday. In addition, there are a number of cancellations on Tuesday 4 April 2017 and Thursday 6 April 2017.
The background to the dispute is that Alitalia is currently in negotiations with its shareholders and banks over the airline’s future. Management have proposed a new business plan which would involve substantial redundancies which trade unions are protesting against.