Alitalia is the airline I love to hate.

They are one of my least favourite airlines ever. Flying them has rarely been a treat. I keep expecting to hear of their demise but somehow they seem to claw their way back from the edge of doom. The current Alitalia is almost five years old rising out of the ashes of the “old” Alitalia which went bankrupt in 2008.

On September 6, the Italian carrier released their first half year financials. Revenue fell four per cent from 1686 million Euro to 1621 million. Passenger loads improved from 71 to 73 per cent, not exactly flash. Revenue per passenger rose three per cent and costs dropped 0.3 per cent. The result was the company’s operating loss improved ever so slightly. Their loss was 255 million Euro compared to a loss of EUR237 previously.

Alitalia has promised to break even by 2015. Can they do it? The slight improvements they have
achieved this year may not be enough. The carrier could run out of cash before year’s end as its liquidity begins to fry up. They have only cash for two weeks operating expenses so the company is very close to the edge.

Next Monday October 14, the Alitalia Board will seek an additional 100million Euro in capital at a shareholder meeting. This request comes just eight months after obtaining a loan from shareholders of millions of Euro. The company’s biggest shareholder Air France-KLM which has 25 percent holding are reportedly opposed to the request.

Air France have options to increase their stake in Alitalia but I am not sure Air France would want to add the loss making Italian carrier to its operation whilst in the mists of their own cost cutting operations. For example, the French carrier has just offered redundancies to 2800 staff. The alternative, though, is that they would also be reluctant to allow their Skyteam partner to collapse and lose their investment?

In the meantime, the Italian Government (not a shareholder) have been seeking additional funds from Italian banks for he carrier. It even “invited” the Italian government railway company to a meeting last Monday!

I cannot see a rescuer from one of the other Sky Team partner carriers:

• Aeroflot, the Russian carrier have been rumoured to be interested but nothing has progressed
• China Southern or China Eastern may be interested in the route network but may not want the expense
• Delta are unlikely to be a candidate.
• Korean have just linked up with Czech carrier CSA
  

An outside white knight is Etihad, who were reported to be considering a 30 per cent stake. This could inject funds and allow the Middle Eastern carrier to funnel passengers through the Alitalia network to Europe and the USA. Etihad already have a European partner in Air Berlin, though.

One thing is for sure. If Alitalia collapsed (finally) or is taken over by Air Ftance KLM, Europe loses another airline. And 14,000 people risk losing their jobs.

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