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Alitalia Poised to Get Another Huge Government Bailout to Keep the Bankrupt Airline Flying

Alitalia Poised to Get Another Huge Government Bailout to Keep the Bankrupt Airline Flying

Two insider sources quoted by the Reuter news agency claims the Italian government is poised to sink a further €400 million into Alitalia to keep the bankrupt national flag-carrier afloat.  Since being put into special administration in May 2017, the airline has already received more than €900 million in tax-payer funded bailout loans as attempts to offload the airline onto a private investor fail to materialise.

The original plan by Italy’s old autocrat government had been to sell Alitalia by May 2018 but a number of potential suitors have all pulled out of the race to buy the struggling airline.  The likes of Italy’s state railway, Ferrovie dello Stato and German airline group Lufthansa have been linked with offers for Alitalia but both have confirmed they no longer have any interest investing in the debt-laden carrier.

Italian Government Wants to Own 15% of Alitalia - A Bad Idea?
Photo Credit: Alitalia

Low-cost airlines like easyJet and Wizz Air have also pulled out after initially showing interest in taking over Alitalia’s short-haul operations.  Delta Air Lines had also been exploring a joint bid for the business but this now looks to have failed.

The current Italian government had been lining up the country’s railway company Ferrovie dello Stato to form a consortium, including Delta, to take on Alitalia but the railway group recently confirmed it had been unable to get a deal approved.  Alitalia is said to be “leaking cash” and faces running out of money by the end of the year.

The new €400 million loan was going to be paid out only if Alitalia’s special administrators found a rescuer but this condition has apparently been dropped in order to stop the airline from going into liquidation.

Reuters claims the decision by the Italian government is likely to anger the European Commission with its decision to give additional money in what may well be a violation of state-aid rules.

Since being formed in 1946, Alitalia has only once posted a profit – and that was back in 1998.  Over the years, it’s estimated that Italian tax-payers have shelled out over €9 billion to keep the airline afloat.  If Alitalia does fail, over 11,500 jobs would be at risk.

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