The venerable Italian airline, Alitalia, state-controlled for long is now being placed before private investors who can now bid for a stake in the company. The government hopes that private funds and know-how will help turnaround the airline which is not registering profits and repeated government funding has not been of much help. In the present scenario, strikes are rife and flights are habitually late.
The minimum stake on offer is 30.1 % and can go up to 49.9%. The bidders should agree to maintain the “national identity†of the carrier and not sell-off their shares below the minimum till they meet pre-defined targets. Alitalia desperately needs to make some profits; it has not made any operating profits for the last five years. One has to go as far back as 2002 to come across a net profit at Alitalia; that too wasn’t out of operations but because KLM paid the Italian carrier EUR 200 million to end a partnership.
The reasons for Alitalia’s woes are mainly political and include wrong purchasing choices over the years. These include five different types of aircrafts, all manufactured by different carriers which has resulted in increased maintenance and training expenses. Also, political pressure has led to the airline using two hubs instead of one.
Aspects that need to be looked into include an oversized staff that could do with some downsizing, tapping the high-growth rates to the Far East; and selecting one hub from between Milan and Rome.
Prospective bidders include Air France and local Italian carriers Meridiana and Eurofly. The Italian government plans to be done with the sale in six months; it has said that it will evaluate bids based on money offered and the plan to redevelop and resuscitate the ailing airline.