MIAMI – The Italian government plans to take control of Alitalia (AZ) as there is no reported buyer to complete the sale of the airline.
The executive had previously set March 18 as the deadline to submit expressions of interest, having the arrangement of the sale set before May 31.
Due to the gravity of the coronavirus situation, the plans to find potential investors were abandoned, according to local daily Il Messaggero. Thus, the “advanced stage” of a nationalization may take place on the already scheduled May date.
Lufthansa (LH), Delta Air Lines (DL), EasyJet (U2), and the state-owned railroad company Ferrovie Dello Stato had all temporarily showed interest for AZ before dropping out to the purchase.
In March, Italy’s Transport Minister, Paola De Micheli, said that the Italian authorities wanted to accelerate the carrier’s sale process following the spread of the COVID-19.
Now, according to local daily La Repubblica, the government is planning an immediate intervention in the air transport industry of about €500m, with €3bn in loans, to help nationalize AZ. In 2019, the company had a €300m total loss of its €1.3bn revenue.
In 2018, the executive re-took 51% of airline’s control because in ten years, AZ had gone through two bankruptcy proceedings, one privatization and statal capital injections.
Worrying financial situation
AZ has been in a struggling situation for years and now is “running out of cash” despite the extra statal €400m injection made at the beginning of 2020, according to Reuters.
The outbreak has further aggravated the financial state of the Italian flag carrier, which has been under extraordinary administration since May 2017 because of its total debt of over €3bn.
At the time, employees rejected a restructuring plan consisting of 1,700 jobs cut proposed by Etihad, its main shareholder with 49% of control. Now, the airline holds 11,000 workers.
In February 2020, AZ removed one Boeing 777 and two Airbus A330s and cut routes to Santiago, Chile and Seoul, South Korea due to losses around €76,000 per day and as a cost saving measure.