Meridiana: losses narrowed in 2013, but cost reductions remain crucial for Italy's other airline

Etihad's planned investment in Alitalia has attracted most of the aviation headlines in Italy recently. But what of Italy's number two indigenous airline, Sardinia-based Meridiana?

Together with its subsidiary Air Italy, Meridiana has a market share of 4% ranked by the number of scheduled seats to/from Italy in the week of 21-Jul-2014. The 2013 annual report of its parent group reveals that it narrowed its losses last year, by lowering cost per passenger more quickly than the fall in revenue per passenger.

Nevertheless, with strong LCC competition continuing to grow, revenue per passenger is likely to remain under pressure and Meridiana will need to find further cost efficiencies if it is to return to profitability. Recent industrial action over plans to outsource part of its operations to other airlines and over its redundancy programme highlight the scale of the challenge in achieving this.