Alitalia-Linee Aeree Italiane

Alitalia - Linee Aeree Italiane S.p.A. (Italian for Alitalia - Italian Air Lines), in its later stages known as Alitalia - Linee Aeree Italiane S.p.A. in Extraordinary Administration, was the former Italian flag carrier. Based in Rome, the company had been in precarious economic conditions for many years and is currently under liquidation.

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. In 2006 the government could no longer offer support to the failing airline since it had been forbidden by the European Union to inject new capital. In August 2008 Alitalia went bankrupt. Compagnia Aerea Italiana (CAI) bought the Alitalia brand and some assets for €1.052 billion ($1.33 billion), paying €427 million in cash and taking on €625 million in Alitalia debts on December 12, 2008.

History

Alitalia - Linee Aeree Italiane S.p.A. 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 intercontinental flight left a year later, flying between Milan and cities in South America. The Savoia-Marchetti SM.95 four engined airliner was used on European routes up to 1949. On 31 October 1957, Alitalia merged with Linee Aeree Italiane and took on the name of Alitalia Linee Aeree Italiane. Alitalia was owned by the Italian Ministry of the Treasury (49%), other shareholders, including employees (49%) and Air France-KLM (2%, now: 25%).

By 1960, Alitalia was operating jet airliner equipment on some European routes (the Sud Caravelle) and the Douglas DC-8 on several longer distance routes.

In 1978 Alitalia had its head office in the Palazzo Alitalia in Rome.^[1]

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, while the actual callsign is "Volo Papale" (papal flight, in Italian) followed by a serial number.^[2]

Alitalia - Linee Aeree Italiane S.p.A. 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. The Italian government supported Alitalia many times until the European Union set a moratorium on any support before 2011. Alitalia - Linee Aeree Italiane S.p.A. did not survive this moratorium. Alitalia - Linee Aeree Italiane S.p.A. went into liquidation in 2008. The viable parts of Alitalia - Linee Aeree Italiane S.p.A. were bought by the private company Alitalia - Compagnia Aerea Italiana on December 12, 2008, which started operations on January 13, 2009.

Alitalia 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 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 failed attempts to take over or merge Alitalia were made.

In May 2008 the government issued a decree that would exempt Alitalia from disclosing information on this sale to the market.^[3] As a consequence the trade in Alitalia stock at the Borsa Italiana in Milan was halted indefinitely by the stock exchange authorities as of 4 June 2008. Intesa Sanpaolo, as requested by the government, devised a plan in co-operation with the Italian cabinet. The plan was that Alitalia would file for bankruptcy, and thus be protected from its creditors. The next step of the plan was to split Alitalia in two parts, one part containing the debts and less promising parts of the company. After negotiations under supervision of the Italian government Alitalia filed for bankruptcy in August 2008.

In September 2008, Pope Benedict XVI revealed that he was offering his prayer for Alitalia, the official papal airline, after takeover talks broke down.^[4]

CAI, Compagnia Aerea Italiana, a consortium of Italian investors, presented a binding offer of €1,100 million to Alitalia's bankruptcy administrator on 30 October 2008 to acquire parts of the airline, pressing ahead despite refusal by some pilots and flight attendants' unions to sign on to the rescue plan. The Italian government and the bankruptcy administrator agreed to the CAI takeover offer on 19 November 2008. The profitable assets of Alitalia - Linee Aeree Italiane S.p.A. were transferred to CAI on December 12, 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.^[5] CAI bought Air One as well.

Financial situation

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 Group 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 were becoming closer and Volare Group had 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 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

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

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) controlled Alitalia Express, Volare SpA, Volare Airlines and Air Europe. Furthermore it controlled 51% of Alitalia Servizi SpA which owned the following companies:

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

Alitalia Servizi also provided IT services for the Alitalia Group (which were be partly outsourced) and ground handling in London Heathrow. It provided passenger handling in Brussels, Athens and Frankfurt. Alitalia Servizi was 49% owned by Fintecna (State agency). By 2008 it could have been sold as a whole or piece by piece as the agreements with the trade unions prevented Alitalia from selling Alitalia Servizi before 2008. Due to the Alitalia reorganisation Alitalia Servizi was never sold.

Alitalia Cargo

Established in 1947, Alitalia Cargo became a member of SkyTeam Cargo in 2001. Destinations concentrate on strategic markets in China, Korea, Japan and the USA.

Alitalia Cargo had a fleet of 5 MD-11 freighter aircraft operating from Malpensa International Airport. Due to financial turmoil Alitalia cargo division was sold off to new owners in 2009.

Alitalia Cargo ceased operations on 12 January 2009.

Alitalia Cargo Operated Three special Boeing 747 aircrafts, That were customized to hold 56 Caddillac Allantés each. Chassis were shipped From Detroit to Italy. The completed bodies were shipped another 3,300 miles (5,300 km) from Italy in specially equipped Boeing 747s, 56 at a time, Back to Cadillac's Detroit/Hamtramck Assembly plant.

http://www.allante.4t.com/history.html

Destinations

Fleet

The Alitalia fleet consisted of the following aircraft (at 31 March 2008):

Aircraft operated

The airline operated the following aircraft:

MilleMiglia

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

Incidents and accidents

Seven Alitalia flights had been hijacked, and 28 aircraft accidents/incidents involved Alitalia planes.^[6] Two Alitalia pilots were killed while acting as passengers during the 1994 A330 test flight. Alitalia actually never purchased the A330, and dedicated two Boeing 767 aircraft to the lost pilots Alberto Nassetti and Pier Paolo Racchetti. In 1983 a hjacked DC-10 Alitalia landed at Luis Muñoz Marin International Airport under orders by hijacker.

Head office

Alitalia's head office was located in Rome. The airline's last head office was on Viale Alessandro Marchetti.^[9] In 1992 Agis Salpukas of The New York Times described the then-new headquarters building as "sleek."^[10] Originally the airline had its head office at Via Maresciallo Pilsudski. In 1967 Alitalia moved its head office to a newly constructed building in the Esposizione Universale Roma (EUR) in Rome.^[11] That head office, the Palazzo Alitlaia, was on and Piazzale Giulio Pastore.^[12][13]

References

See also

• Alitalia Express