Alitalia: defying gravity again - another loss, another turnaround plan, maybe another last chance

On 15-Mar-2017 Alitalia’s Board of Directors approved yet another turnaround plan. After losses throughout this century and yet another postponement of Alitalia's planned return to profit, this time pushed back from 2017 to 2019, each successive plan becomes more vital to its survival.

Alitalia's latest plan envisages revenue growth of 30% and cost reductions totalling EUR1 billion by 2019. It includes narrowbody fleet cuts, offset by seat densification, load factor gains and improved utilisation. It plans modest widebody growth, with expansion of capacity to the Americas in particular.

A major focus is to improve Alitalia's competitiveness on short/medium haul, which is increasingly dominated by LCCs, and which is vital to feed its long haul. All the usual features of becoming more competitive versus LCCs are in the plan: lower unit costs, unbundling and a simplified fare structure as a result of headcount reductions and other savings in operating costs.

Labour productivity improvement remains crucial to the plan's success. The plan’s funding, and Alitalia's future growth, will be subject to trade union agreement to a new collective agreement and headcount reductions. However, the immediate union response was to call a strike after management presented the plan to employees. Surely this has to be the last chance.

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