Italy to renationalize Alitalia after virus scares off buyers

Alena Zharava

As the potentiality to find a buyer in the context of the coronavirus Covid-19 epidemic is almost null, the Italian government seems ready to re-nationalize Alitalia, according to local media reports.

With this plan B, which is already at an “advanced stage” according to the daily Il Messaggero, the government would take control of air and land operations of Alitalia. 

A draft proposal outlines “the establishment of a new company wholly controlled by the Ministry of Economy and Finance or controlled by a company with predominantly public and indirect public participation.”

The nationalization of the carrier, which currently employs 11,000 people, could take place as early as May 31, 2020, the deadline previously set for the tender.

A state buyout would put an end to three years of unfruitful sale attempts and negotiations. Lufthansa (LHAB) (LHA) , Delta Air Lines, EasyJet, and Delta Air Lines, and the state-owned railroad company Ferrovie Dello Stato have all temporarily showed interest for the airline before dropping out.

Since May 2017, the carrier has been under “extraordinary administration” after employees rejected a restructuring plan from its main shareholder, Etihad (49%), which would have seen 1.700 jobs being axed. The Gulf airline, known for its risky foreign investments, had then decided to divest from the Italian company. The airline had accumulated over €3 billion of debt. 

Despite two grants in the form of loans, for a total amount of €1.3 billion euros the company posted a loss of €300 million euros in 2019. According to the local media La Repubblica, the state could grant a new loan of €1 billion following the nationalization.

With the global loss of demand in aviation due to the epidemic, other carriers may have to rely on government aid. French airlines have already demanded a tax delay or exemption. While Air France-KLM has announced it expected severe losses, it does not appear that the French state will inject any cash into the carrier through an increase in its participation.

The coronavirus Covid-19 has already made one victim among European airlines: Flybe, the largest regional carrier in Europe, entered administration as Virgin Atlantic could no longer commit to continued financial support.


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