Alitalia to be nationalized again

The "Cura Italia" decree includes provisions to nationalize the Italian flag carrier after years on the verge of bankruptcy and failed privatization attempts. 500 millions of euros of public funds have been granted to support the airline

A new chapter has been added to the history of Alitalia, a history rich of privatization attempts, insolvency procedures and failed mergers and alliances. The details of this new chapter are specified in the “Cura Italia” decree, which include provisions and measures to support the Italian economy during the pandemic, and that was published on March 17. Half a billion of euros have been granted to support Alitalia and other airlines registered in Italia. A public-owned NewCo has been created and is expected to take over operations from Alitalia. As such, Alitalia will be nationalized once again, after years of insolvency procedures, while the search for a potential buyer has been temporarily suspended.

Alitalia has been through heavy turbulence in the recent past. Starting from the late 90s, Alitalia has had to cope with a series of changes that have affected the company’s competitiveness and profitability. The changes and the crises that have affected the airline industry such as the emergence of low cost carriers in Europe and the sudden drop in demand following the 9/11 attacks have taken a toll on the company’s profit margins. In the year 2000, Alitalia’s executives and the Italian Government, which held a majority stake in the company at the time, attempted to form a partnership with KLM, with the goal of merging the two companies in the future. The purpose of the partnership was to strengthen the Italian airline’s financial position, which had been severely damaged. Nonetheless, the attempt failed and KLM signed a strategic partnership with Air France soon afterwards.

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