Alitalia faces bankruptcy as workers vote ‘no’

LUMINOSITY ITALIA

Italian airline Alitalia will begin bankruptcy proceedings after the company’s workforce of 12,500 voted against a restructuring plan that would have brought job cuts to help keep the cash-strapped carrier airborne.

With time running out to pay suppliers and salaries, the airline said it will file for bankruptcy for the second time in a decade.
Alitalia: business news
Alitalia could be permanently grounded as it moves into bankruptcy proceedings and possible liquidation.

The employee vote on April 24 was part of approval on a €2 billion recapitalization of the company including €900 million in new financing. The airline is 49 percent owned by Abu Dhabi-based carrier Etihad after a capital injection in 2014 designed to help turn the long-struggling airline around.

“The most likely scenario is that we will go towards a short period of special administration that may be concluded within six months with a partial or total sale of Alitalia’s assets or with liquidation,” Economic Development Minister Carlo Calenda told TG3 in a television interview.

Calenda previously said the company will be placed into special administration for about six months, taking Alitalia toward liquidation.

Italy has said it will not spend state money to nationalize the airline. The package rejected by workers included 1,600 job losses meant to help the carrier break even, down from 2,000 proposed under an earlier plan. In a statement Etihad said the employee rejection means “all parties lose”.

UniCredit SpA, Italy’s largest bank, said it has now lost almost 500 million euros on Alitalia.

The carrier’s share of the Italian market slumped to 18 percent in 2015 from 23 percent in 2007, according to study by Ugo Arrigo and Andrea Giuricin of Milan Bicocca University. Ryanair, Europe’s biggest discount carrier, now ranks No. 1 in Italy with a 23 percent share while EasyJet has some 12 percent.

Alitalia has reduced its network beyond Europe, North Africa and the Middle East to only about 15 destinations. On what has traditionally been the busiest route, Milan to New York, it also now faces stiff competition from Emirates Air.

Etihad could seek to sell its stake to Lufthansa, Italian newspaper La Stampa reported.