Alitalia heads into administration for second time

Alitalia started bankruptcy proceedings for the second time in a decade, throwing the survival of Italy’s flag carrier into doubt after it failed to fend off budget rivals.

Shareholders voted unanimously to file for insolvency administration, the airline said.

Under Italian law, the government will appoint supervisors to turn around the company or order its liquidation.

The state will provide a bridge loan of about €500m to help the carrier maintain operations in the coming months, according to sources.

Alitalia, which was mainly backed by Etihad Airways, last week said it had exhausted all options to stay solvent after workers rejected a €2bn refinancing plan involving 1,600 job losses.

The cuts to its workforce of 12,500 employees may be even deeper under administration, as a rescue appears unlikely. Etihad, which owns 49% of the carrier, said it won’t extend additional funding.

“It is clear this business requires fundamental and far-reaching restructuring to survive and grow,” Etihad chief executive CEO said.

Alitalia, which missed out on a round of consolidation that shored up other European flag carriers, has seen its standing further eroded since a previous bankruptcy in 2008.

Etihad’s stake purchase, part of a €1.76bn rescue of Alitalia in 2014, was a major chance as the Persian Gulf carrier sought to transform the struggling company into a five-star operator.

The plans never panned out as Ryanair and EasyJet further ate into its position in Italy, and terror attacks in Europe hurt tourism.

Bloomberg