Alitalia relaunches under new ownership

On Tuesday Alitalia begins operating under new ownership and faces the daunting task of competing with no-frills rivals in key domestic markets.

Since entering bankruptcy protection in August 2008, with a debt load of over €1.2 billion, the Alitalia organization has undergone dramatic changes.

The financial position of the airline was largely cleared up by the Italian government taking on most of the carrier’s debt and permitting it to cut thousands of jobs. Led by Prime Minister Silvio Berlusconi, the government’s moves helped attract a consortium of Italian investors that eventually acquired the 49.9 per cent government stake in the troubled airline.

The investor consortium formed a partnership with Air France-KLM, which will see Air France paying in excess of €320 million for a 25 per cent ownership stake in the carrier, according to insider reports.

Alitalia’s new investors believe that the airline can reclaim its earlier dominance in the Italian domestic market that it enjoyed before it began its tailspin in the late 1990s.

Part of the restructuring has seen the merger of Alitalia with its largest domestic rival Air One, increasing its share of the internal market to over 55 per cent. The lucrative domestic network of routes, such as the link between Rome and Milan, is an important factor in the business plan that shows the carrier breaking even in 2010.

www.alitalia.com