MIAMI – Italian national carrier, Alitalia (AZ) has this week announced it would off-load one Boeing 777 and two Airbus A330s in its fleet in order to stay afloat.
The airline officially declared bankruptcy in 2017 but has still been able to operate, thanks to hand-outs from the Italian government.
It also announced that it will cut routes to Santiago and Seoul as part of further cost-cutting measures.
The route cuts are due to the fact that AZ loses around 76,000 EUR per day when flying to those two destinations.
For example, the 777 services to Santiago made a net loss of around $8.6 million in 2018, according to Simple Flying, with the Seoul route losing around $13.8 million as well.
The Seoul route had suffered in particular due to severe competition from the likes of Korean Air and Asiana.
In total, between 2018 and 2019, the airline had lost over $50 million on those two routes alone.
On top of this, the Boeing 777 that the airline is offloading will save them around $675,000 per month, with the two Airbus A330s also saving the airline around one million dollars a month.
AZ will still hold around 12 of the aircraft type within its fleet through heavy investor, Etihad.
In terms of the short-medium haul sector, AZ’s fleet may be at risk, with sources suggesting around six Airbus A320/A321 aircraft will be leaving its fleet.
It is unclear which routes will be affected as a result of this, but it is still a chunk taken out of the carrier’s operational fleet.
These cuts will be somewhat necessary for the future outlook of AZ, especially with it being given the task to restructure and make itself appear to be financially viable.
Interest from the likes of EasyJet, Delta, Lufthansa and others have died down due to the lack of positive news regarding cash flow.
With competitors reducing airfares due to better efficient business models, AZ needs to restructure its business from a similar perspective, especially if it wants to have a chance of making it into an already volatile industry.