Alitalia-Linee Aeree Italiane

Alitalia

File:Alitalia.png
IATA ICAO Callsign AZ AZA ALITALIA
Founded	1946 (as Aerolinee Italiane Internazionali)
Hubs	Leonardo da Vinci-Fiumicino Airport
Focus cities	Malpensa International Airport Linate Airport
Frequent-flyer program	MilleMiglia
Alliance	SkyTeam
Subsidiaries	Alitalia Express Volare Airlines
Fleet size	91
Destinations	101
Headquarters	Rome, Italy
Key people	Augusto Fantozzi
Website	http://www.alitalia.com

Alitalia Airbus A321-100 landing at London Heathrow Airport, England. (2007)

Alitalia—Linee Aeree Italiane S.p.A. (Italian for Alitalia - Italian Air Lines) (BIT: AZA10) is the flag carrier airline of Italy. Headquartered in Rome, it operates services to 24 domestic and 66 international destinations. Alitalia is the world's 19th largest passenger airline by fleet size. The airline's hub is Leonardo da Vinci-Fiumicino Airport, Rome. Although Malpensa International Airport, Milan was one of Alitalia's hubs, it has been downgraded to a focus city with the transition completed by April 2008, leaving Rome as the airline's only hub .

Alitalia’s top 12 routes are all from Rome’s main airport where it has a 53% share of domestic flights and capacity. On these routes Alitalia faces head-to-head competition from at least one other airline on 10 of them, with only Naples and Bologna as monopoly routes.

The Italian government and some other organizations have invested €4.9 billion since 1998. Several attempts to take over or merge Alitalia were made between 2005 and 2009. The government could, in 2006, no longer offer support to the failing airline since it had been forbidden by the European Union to inject new capital. Alitalia's troubles became so severe in 2005 that Consob, Italy's stock market regulator, required it to report monthly on its debt and cash positions. In August 2008 Alitalia went bankrupt. Compagnia Aerea Italiana, CAI, bought Alitalia for €1.052 billion ($1.33 billion), paying €427 million in cash and taking on €625 million in Alitalia debts on 12th December 2008 .

History

Alitalia was established on 16 September 1946 as Aerolinee Italiane Internazionali, more commonly known as Alitalia, an Italian portmanteau of the words ali (wings) and Italia (Italy). It started operations on 5 May 1947, in which year it carried over 10,000 passengers. The inaugural flight was with a Fiat G-12 Alcione, piloted by Virginio Reinero from Turin to Catania and Rome. The first international flight left a year later, travelling between Milan and cities in South America. On 31 October 1957 Alitalia merged with Linee Aeree Italiane and took on the name of Alitalia Linee Aeree Italiane. Alitalia is owned by the Italian Ministry of the Treasury (49%), other shareholders, including employees (49%) and Air France-KLM (2%).

President George W. Bush walks the red carpet with Pope Benedict XVI. Behind is "Shepherd One" a specially dedicated plane for the Pope belonging to Alitalia. (2008)

By the 1990s, Alitalia was carrying 25 million passengers annually. In 1997 it set up a regional subsidiary Alitalia Express and in 2001 became a member of the SkyTeam Alliance. In November 2003 Alitalia announced that it would cut 2,700 jobs over the next three years to prepare the airline for a merger with Air France and KLM. In April 2004 Alitalia acquired the bankrupt regional airline Gandalf Airlines to gain additional slots at several European airports, mainly in Milan (Linate) and Paris (Charles De Gaulle).

Alitalia employed 18,182 staff as of March 2007.

Typically, the Pope flies on a chartered Alitalia Jet. The Pope's flight is often nicknamed "Shepherd One" by the press which is the callsign used when the pope is onboard.

Financial situation

Main article: Financial situation of Alitalia

History

Alitalia has lost money for years owing to problems with pilots and crew members and labour difficulties, and to government and political interference with attempts to solve them. It has reported only one year of profit (1998) since its foundation in 1946. Alitalia reported net losses of more than €3.7 billion between 1999 and 2008. Previous state aid to Alitalia included some €1.5 billion in 1998 from the government of premier Romano Prodi. In 2002 Alitalia received a capital increase of €1.432 billion under the government of Silvio Berlusconi. In 2004 the Berlusconi government gave a €400mn 'bridge' loan to Alitalia. In 2005 the capital of Alitalia was increased by €1.6 billion, including an over-€500mn bond float issued with the promise of a return to profit in 2006. (Unfortunately the year ended with a loss of €626 million). In 2008 the Italian government gave a bridging loan of €300mn to Alitalia. The Italian government and some other organizations have invested €4.9 billion since 1998.

Alitalia's troubles became so severe that Consob, Italy's stock market regulator, requires it to report monthly on its debt and cash positions.

The government could in 2006 no longer offer support to the failing airline since it had been forbidden by the European Union to inject new capital. Therefore, as all other attempts to save the company had failed, the Italian government announced its willingness to lead Alitalia towards privatization by lowering its part of ownership in it. Several attempts to take over or merge Alitalia were made. In October 2008 Alitalia was sold to CAI, Compagnia Aerea Italiana. Intesa Sanpaolo, as requested by the government, devised a plan in co-operation with the Italian cabinet. The gist of this plan was that Alitalia files for bankruptcy, and thus be protected from its creditors. The next step of the plan was to split Alitalia in two parts. One part contained the debts and less promising parts of the company. This part will be liquidated; the Italian government stated that the holders of Italian shares would be compensated. It is not clear what this means. The other part contains the landing rights, pilots and some of the planes. This last part was bought by CAI, a consortium of Italian investors, and to receive an investment of €1 billion, along with new management and the guarantee of the cabinet that the company would free of the old debts of Alitalia and would merge with Air One.

CAI, Compagnia Aerea Italiana presented a binding offer of 1100 mln euro to Alitalia's bankruptcy administrator on 30 October 2008 to acquire the airline, pressing ahead despite refusal by some pilots and flight attendants' unions to sign on to the rescue plan. The approval of the administrator came at the end of November 2008. The offer by CAI called for cutting aircraft, routes, workers and infusion of nearly 1.1 billion euros (nearly $1.3 billion) this included the price for the take over . CAI consists of several Italian investors. After negotiations under supervision of the Italian government Alitalia filed for bankruptcy in August 2008. CAI presented a binding offer to Alitalia's bankruptcy administrator on 30 October 2008 to acquire the airline, pressing ahead despite refusal by some pilots and flight attendants' unions to sign on to the rescue plan . The negotiations between CAI and the unions were tense. A breakthrough came after last-minute talks at the premier's office. CAI stated that the offer, with its "ambitious but realistic" plan for turning Alitalia around, stands, assuming the European Commission doesn't lay down obstacles on antitrust grounds.

From October 2008

On 30 September 2008 Alitalia Group had a net debt of €1.199bn and the available cash was €245mn. The net debt of Alitalia has decreased €47 million since August 2008.

The Italian government and the bankruptcy administrator agreed to the CAI takeover offer on 19th November 2008. The profitable assets of Alitalia were transferred to CAI on December 12th 2008, when CAI paid the offered sum. CAI paid €1.052 billion ($1.33 billion), paying €427 million in cash and taking on €625 million in Alitalia debts. CAI is liable for all Alitalia expenses per 1 December 2008 .CAI bought Air One as well.

The EU and the Italian atitrust authority agreed on the sale of Alitalia to CAI on the 4th and 3rd of December 2008. The EU stated that the sale was at a fair market value. The Italian antitrust authority saw no major objections to the takeover, but some minor ones .

CAI said that it was searching for a partnership with a major airline group, possibly as a partner; Air France-KLM, British Airways and Lufthansa have been courted.

Volare controversy

In December 2005, the bankrupt Volare Group (Volareweb, Air Europe) was put up for sale. Alitalia bid to buy the group (other bidders were Air One and Meridiana/Eurofly). Air One went to court claiming that Alitalia could not buy Volare as it had received state aid in the past. The TAR (Regional Administrative Tribunal) of Lazio tried to block Alitalia's acquisition of Volare Group but abandoned the attempt, claiming that Alitalia had repaid its €400 million loan and so there would be nothing stopping it from buying Volare Group. Air One also went to court, unsuccessfully. Alitalia created Volare SpA to buy the Volare Group. The airlines are getting closer to each other and Volare Group has started providing soft maintenance services for some Alitalia aircraft in Milan Malpensa airport. However, the Italian Consiglio di Stato (State Council) on 23 May 2006 has once again blocked the acquisition of the airline. It is not clear what is going to happen as Volare is in serious financial difficulties. On November 2, 2006 TAR court decided that the administrative procedure used by the Italian government to sell Volare to Alitalia was invalid. But the selling contract is still valid because the administrative court was declared incompetent about this topic. If Air One wants to obtain Volare it will have to go to the local civil court and ask it to declare that the selling contract is invalid.

Malpensa hub

In 1995 Alitalia signed a partnership with KLM Royal Dutch Airlines which aimed at a merger. The aim of the partnership was to develop Malpensa as a hub, along with Amsterdam (which lacked enough landing slots to expand further) and Rome Fiumicino. The problem was that in Milan there are two airports: Milan Linate (close to city centre but small) and Milan Malpensa (far from city but large and expandable). The Italian Government planned to move all flights to Milan Malpensa, apart from Milan-Rome Fiumicino.

The EU airlines went to the European courts, as they claimed that the development of Milan Malpensa and the closure of Milan Linate would provide an anti-competitive situation in favour of Alitalia. They claimed that Alitalia could go on feeding its Fiumicino hub from Linate but they could not. Furthermore they claimed that Malpensa was too far (40 km) and lacked the infrastructure to/from the city (the rail link would open a year after the opening of the hub). After many court disputes the EU decided to leave 33% of the flights at Linate until the rail link opened.

KLM broke off the alliance with Alitalia; and Cempella (head of Alitalia) was replaced by Mengozzi, who had the role of getting Alitalia back on track. In 2000 he signed a 2% share exchange with Air France and in 2001 joined the SkyTeam alliance.

In 2001 Alitalia renewed the ground handling contract with SEA.

In September 2007, Alitalia announced that it would nearly halve its hub at Malpensa and instead focus on Rome-Fiumicino and move all intercontinental flights there. Until this announcement, Malpensa had been Alitalia's primary hub for intercontinental flights. The transition away from Malpensa and towards Rome-Fiumicino was completed by the end of March 2008. Minor intercontentinental destinations, which previously received flights only from Malpensa, henceforth received only flights from Rome-Fiumicino, or else were discontinued.

Lawsuits and complaints

Alitalia filed a lawsuit against the website AlitaliaSucks.com in the US courts, claiming the violation of various trademark laws – the Anticybersquatting Consumer Protection Act, the Lanham Act, and the state common law of trademark. The corporation's bid to fine and silence the creators of the website was withdrawn when Public Citizen, a US national non-profit consumer advocacy organization stepped in to support the website's owners according to the First Amendment.

In December 2005, Italy's antitrust agency fined Alitalia €30,000 for misleading consumers by advertising a round-trip flight tariff while showing only the price of a one-way ticket. The antitrust agency in a statement said the advertisement appeared on Alitalia's web site during May and June 2005.

The European Court of Justice has in July 2008 rejected an appeal by Alitalia against the European Commission in a long-running inquiry into Italian state aid. The airline challenged conditions set by the commission in 2001 for the use of state aid in restructuring the company. The court ruling does not impose any new conditions on Alitalia and the commission considers the case settled. A statement: "the Court of First Instance dismisses Alitalia's action and confirms that the commission's decision of 2001 is valid". The court: "confirms the validity of each of the conditions imposed on Alitalia by the commission". These conditions were:

• a requirement that the Italian authorities act as a normal shareholder;
• that cash injections be used only for restructuring Alitalia and not for expanding the business;
• that Alitalia sells its holding in the Hungarian airline Malev;
• and that the state aid take the form of a one-off payment.

Alitalia Servizi

Alitalia Boeing 777-200ER at Ezeiza Airport, Argentina. (2006)

Carlo Cimoli, after becoming President and CEO of the Alitalia Group, divided the group into two holdings to cut costs. Alitalia (referred to as Alitalia Fly) controls Alitalia Express, Volare SpA, Volare Airlines and Air Europe. Furthermore it controls 51% of Alitalia Servizi SpA which owns the following companies:

• Alitalia Airport (100%): ground handling services in Rome Fiumicino, Palermo, Cagliari and London Heathrow (under the Alitalia Servizi brand). It provides passenger handling services in: Catania, Naples.
• Alitalia Maintenance Systems (60%): maintenance services, it is 40% controlled by Lufthansa Technik.
• Atitech (100%): maintenance services in Naples.

Alitalia McDonnell Douglas MD-82 landing at London Heathrow Airport, England. (2007)

Alitalia Servizi also provides IT services for the Alitalia Group (which will be partly outsourced) and ground handling in London Heathrow. It provides passenger handling in Brussels, Athens and Frankfurt. Alitalia Servizi is 49% owned by Fintecna (State agency). By 2008 it could be sold as a whole or piece by piece as the agreements with the trade unions prevent Alitalia from selling Alitalia Servizi before 2008.

Alitalia Cargo

Established in 1947, Alitalia Cargo became a member of SkyTeam Cargo in 2001. Alitalia Cargo is also a member of Cargo 2000, an IATA enterprise involving the biggest air cargo operators worldwide.

Alitalia Cargo has a fleet of 5 MD-11 freighter aircraft operating from Malpensa International Airport. Destinations concentrate on strategic markets in China, Korea, Japan and the USA.

Due to financial turmoil Alitalia cargo division will be sold off to new owners in 2009.

Destinations

Main article: Alitalia destinations

Fleet

The Alitalia fleet consists of the following aircraft as of November 2008:

Alitalia Fleet

Aircraft	Total	Passengers (Magnifica*/Economy)	Routes	Notes
Airbus A319-100	12	126	Domestic/International short-medium haul
Airbus A320-200	11	153	Domestic/International short-medium haul
Airbus A321-200	23	187	Domestic/International short-medium haul
Boeing 767-300ER	10	214 (25/189)	International medium-long haul Accra, Boston, Caracas, Chicago, Lagos, New York JFK, Newark, Toronto
Boeing 777-200ER	10	291 (42/249)	International long haul Buenos Aires, Los Angeles, Miami, Osaka São Paulo, Tokyo
Embraer 170	6	72	Domestic/International short haul	Operated by: Alitalia Express
McDonnell Douglas MD-11F	5	freight only	International long haul Hong Kong, New York, Shanghai	Operated by: Alitalia Cargo
McDonnell Douglas MD-82	58	141 164	Domestic/International short-medium haul

^{*Magnifica is the name of the Business Class offered on International medium-long haul flights.}

The average fleet age of Alitalia is 12.7 years as of March 2008. The new Alitalia will retain approximately 80 aircraft from its current fleet and merge them with Air One.

MilleMiglia

The airline's frequent flyer program is named "MilleMiglia", and is part of the SkyTeam alliance program, allowing passengers to collect miles and redeem them with free tickets across the whole alliance.

Incidents and accidents

Seven Alitalia flights have been hijacked, and 28 aircraft accidents/incidents involved Alitalia planes. Two Alitalia pilots were killed as passengers during a 1994 A330 test flight; Alitalia subsequently never purchased an A330, and dedicated two Boeing 767 aircraft to the lost pilots (Alberto Nassetti, Pier Paolo Racchetti)

Alitalia Incidents and Accidents

Flight	Date	Aircraft	Location	Description	Injuries
					Fatal	Serious	Minor	Uninjured
	December 18, 1954	Douglas DC-6	New York City, New York	Circled for 2½ hours in fog; during the fourth landing attempt, the plane overshot the runway and exploded	26	0	0	6
771	July 7, 1962	Douglas DC-8	Chatrapati Shivaji International Airport, Mumbai	Controlled flight into terrain	94	0	0	0
112	May 5, 1972	Douglas DC-8	Palermo, Italy	Crashed due to inclement weather	115	0	0	0
4128	December 23, 1978	McDonnell Douglas DC-9	Palermo, Italy Punta Raisi Airport	Crashed into sea just short of the runway	107	0	0	21
404	November 14, 1990	McDonnell Douglas DC-9	Zürich	Crashed	46	0	0	0

See also

• Alitalia Express