Reuters: Alitalia’s Situation Is Dire, Carrier Loses 2 Million Euro Each Day It Operates

A current Reuters article is spelling out in numbers what everybody has knows for years: Alitalia is a money furnace, losing roughly 2 Million Euros each day.

The data comes from Italy’s Industry Minister Stefano Patuanelli who talked to reporters last Thursday after similar comments were made to a government inquiry committee.

Over the years Alitalia pretty much went through hundreds of Millions, if not BIllions of Euro and burned multiple investors along the way that each have lost a fortune, Etihad being the most prominent investor that sank a lot of money into the Italian carrier.

As Reuters reported this weekend the Italian government is now talking figures and has estimated the average daily loss to be close to 2 million Euros.

Alitalia loses as much as 2 million euros ($2 million) a day, Italy’s Industry Minister Stefano Patuanelli said on Thursday, clarifying a comment he had made at a parliamentary committee the day before.

The estimate lays bare the challenge facing the airline’s new temporary administrator, who was been appointed earlier this month to cut costs and find a buyer for Alitalia after a consortium of potential rescuers backtracked.

Asked about how much Alitalia was bleeding, the minister said “2 million euros a day” and then added “we are talking about a (daily) loss that fluctuates during the year because the cash-flow is completely different in different periods of the year,” Patuanelli told reporters on the sidelines of an event.

Patuanelli added that it was up to the airline’s new administrator Giuseppe Leogrande to release a final data on the loss for this year.

On Wednesday, speaking at a parliamentary committee, the minister had estimated a loss of nearly 2 million euros a month.

Italian railway group Ferrovie dello Stato has held unsuccessful talks with Delta Air Lines and infrastructure group Atlantia to set up a consortium of investors for Alitalia.

Quiet a discrepancy there between 2 Mio loss a month and 2 Mio per day. How did this happen?

Finding any more external investors for Alitalia is probably worse than finding a needle in a haystack. The reputation of the airline is shot, it’s pretty obvious that this company will never ever be profitable under it’s current management and debt structure.

Alitalia suffers from the typical sickness of a state owned company. High debt, massive pension liabilities, too many employees, permanent threats of strike action by unions and to a certain degree corruption in various forms.

The last effort to get Alitalia under control was in July when John wrote the airline was in talks to be essentially nationalized through local state owned companies. The carrier has been in administration for quite some time but it still operating on full schedule.

Conclusion

With a 2 Million Euro daily loss this translates into 750 Million a year. Throwing more cash at this (especially taxpayer money) is just silly. While it would send shock waves through the country, finally pulling the plug and put the airline out of it’s misery would likely be the most sensible thing. It’s not like Alitalia is the only carrier that could serve Italy’s air transportation requirements, the routes would quickly be absorbed by other airlines.

The carrier currently has ~ 12,000 employees who would be directly affected by a grounding should it eventually come.

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