International Monetary Fund stated Greece, Italy, Japan and Portugal are the advanced economies closest to unsustainable levels of government debt, adding that the four nations are most at risk of needing drastic budget cuts to avoiding facing uncontrollable increases in public debt (Bloomberg, 02-Sep-2010).
Greece, Italy, Japan and Portugal face unsustainable government debt: IMF
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Aegean Airlines cuts capacity for first time since Olympic Air acquisition; 2016 margin falls
In 2017 the Aegean Airlines Group will make its first cut in seat capacity and fleet numbers since 2012. This follows three years of rapid expansion by the group since its Olympic Air acquisition in 2013. Olympic's all turboprop fleet focuses on the domestic market but also helps to feed Aegean's international network, particularly through its Athens hub. Cuts will focus on the domestic market.
Aegean will also make an important longer term fleet decision in 2017, or early 2018. The majority of its aircraft leases will need to be replaced between 2019 and 2023, and it is weighing the options. Aegean currently operates Airbus narrowbodies, but will consider the Boeing 737MAX in addition to the A320neo family.
Aegean's last capacity cut was in 2012, the end of a four year period of losses when Greece was in a deep multi year recession. Since then it has made healthy profits, but while profitable its operating margin fell in 2016 for the second successive year. Greece has experienced rapid capacity growth from LCCs, led by Ryanair. A decline in Aegean's unit revenue over three years has now prompted a pause for what its Executive Vice Chairman has called "consolidation and readjustment".
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.