MarketLine Blog

Alitalia staff vote down latest cost cutting plan: Financial difficulties making the future of the company look increasingly uncertain

Alitalia has for many years now been a company incurring consecutive losses year after year. Historically the Italian government has stepped in during times of extreme financial difficulties to bail out the country’s flag carrier. However in 2014 it agreed to sell a 49% stake in the company to UAE based Etihad Airways, which subsequently invested significant resources into Alitalia in order to turn it into a profit making company. Disappointing results nevertheless have continued and Etihad’s attempts to get the company to reduce costs by lowering wages and reducing the number of staff have been voted down by Alitalia staff. This situation has resulted in Alitalia increasingly losing its market share in Italy to low-cost airlines like Ryanair and EasyJet.

The most recent impasse between Alitalia staff and Etihad has resulted in Etihad and other shareholders refusing to invest further capital into the company, meaning that unless the Italian government bails out Alitalia again, which the government has repeatedly said is not an option, then either Alitalia will have to find a new investor or face liquidation. Lufthansa has been speculated by the media to be interested in purchasing a stake in Alitalia but the company has officially denied this. If no prospective buyer pops up in the coming months, then Alitalia heading towards liquidation is a very real possibility.

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