Alitalia: Is this the end of the line? An airline that is no longer commercially needed

On 2-May-2017 Alitalia's Board of Directors filed with the Italian Ministry of Economic Development for "amministrazione straordinaria" (extraordinary administration). This followed confirmation by the airline's shareholders, including Etihad, that they would not provide the EUR2 billion of fresh capital previously earmarked for Alitalia. The planned new investment had been conditional on employee acceptance of Alitalia's restructuring plan. However, the workforce voted against the preliminary agreement reached with union leaders.

The Italian state has now given Alitalia guarantees for EUR600 million of bridging loans to keep it flying in the short term, and its flight schedule remains unchanged. The new debt is expected to last for around six months and the government is unlikely to follow it with any further cash.

This buys time for the administrators to explore the potential, if any, to save Alitalia, including looking for potential acquirers. The Italian airline's long record of losses, its multiple restructurings and its administrations in the past are likely to deter other airlines from investing. Alitalia has long had a Lazarus-like ability to come back from the dead, but its workforce's latest refusal to accept the need for change could be the final nail in its coffin this time. Presumably they expect some form of government salvation. But even the government may have run out of patience.