New Alitalia plan to focus on long-haul
The Alitalia board is looking for a source that will be willing to invest substantial financial resources in the beleagured airline while it awaits a decision regarding its ownership.
At present, the Italian government has a 49.9 percent stake in Alitalia. In July, the government called off a seventh-month public tender process for the airline after the final bidder, Air One parent AP Holding withhdrew from the process according to a report by e-tid.com.
On Friday the board said it had approved Alitalia’s 2008-2010 Business Plan, which is aimed at ‘achieving conditions of sustainability and continuity for company activities in the short/medium term’.
According to Alitalia’s new plan for survival, which will be implemented from March 30, 2008, the volume of passengers traveling with the Alitalia Group, including Volare, should increase from about 25.5m this year to c28.7m in 2010, ie an average annual growth rate of 3.8%. Capacity, meanwhile, will rise by an average of just 1.6% pa.
According to the ‘Plan for survival/transition’, the number of short/medium-haul flight hours will be cut by an average of 0.3% annually between 2007 and 2010, and the number of long-haul flight hours will rise by 5% over the same period. This is expected to help boost load factor from 64% in 2007 to about 68.4% in 2010.
No details were given about any job losses resulting from the Plan, but the board said the effects on employment levels would be ‘defined in close collaboration’ with trade unions.
Unit revenues are expected to decline by about 2.7% between 2007 and 2010 due to the repositioning of Alitalia’s long-haul activities and the development of low-cost services. However, improved fleet productivity, the ‘rationalisation of activities’ and a reduction in prices paid for services will lead to an 8% decrease in unit costs over the same period.
Alitalia said that it hoped to achieve a positive operating margin by the end of the Plan due to all the measures outlined in their Business Plan. The airline also added that erosion of equity during the Plan period was unavoidable in the absence of a capital increase.
The board also said that with the support of financial advisor Citi it had started first contacts with potential investors interested in taking control of Alitalia.
Chitra Mogul
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