This one certainly came out of left field, but I think it’s a great move. Virgin America announced today that it has decided to rebrand as Alitalia America on June 1. Further, Richard Branson will sell his 25 percent stake in the airline to Italian politician, businessman, and, uh, “playboy” Silvio Berlusconi. When this happens, David Cush will step down as CEO with a familiar face coming to take his place.

I love this move. After all, Virgin America has been losing money continuously since it started six years ago. Despite some revenue progress, it still can’t cover its costs. How do you fix that? Lower your costs. As you can imagine, the Alitalia brand is much cheaper to license than the Virgin brand. (If I were Alitalia, I’d pay anyone to take my brand off my hands.)

Then again, there are going to be some cost increases in the short run as the airline transitions. Headquarters will move from San Francisco’s Bay Area to the North End of Boston. And of course, a new livery is coming. As you can see, it looks a lot like what Alitalia has painted on its airplanes today. But I’ll talk more about that later. First, let’s talk politics.

As part of this change, CEO David Cush will be getting the boot, and former CEO Fred Reid is back in his place. You remember this story, right? During the fitness test to see whether the airline was truly controlled by foreign interests or not, the DOT decided that Branson had hand-picked Fred to lead the company and Branson had too much influence in his decision-making. The DOT forced Fred out. Well, now that Branson is no longer involved, that’s not an issue.

I’ll give it to Fred for knowing the airline’s place. “When you think of Alitalia, you think of an airline that may not have its act together, may not make money, but it keeps fighting the good fight. That fits us perfectly.”

The airline has already announced some big changes to give it more of an Italian feel. Alitalia America is partnering with Ferrari to create new seat designs while new flight attendant uniforms will be created by Benetton. Coffee will now be from Illy, but this means some configuration changes on the airplane. Three seats will be removed on each aircraft to make room for an espresso machine. All mood lighting onboard will now be green and red instead of purple and red.

Onboard food changes have already begun. The Godfather Sandwich is a new item already on the menu, with more changes to follow. Despite the Italian influence, there will be a distinctly American flavor. Chef Boyardee products and Domino’s pizza will soon be on every flight.

We’re going to see more than just changes on the aircraft. In cities where both Alitalia and Alitalia America fly, they will consolidate terminals. That means in LA, Alitalia America will move to Terminal 2. In New York, Alitalia will move to Terminal 4.

Alitalia America will begin building up its presence in cities with large Italian populations. Look for Philly and the new hometown of Boston to see big increases while San Francisco faces large cuts. The airline will also begin flying to every airport in New Jersey.

To fall in line more with Alitalia’s business plan, Alitalia America will purposefully only sell two thirds of the seats on each airplane to give people room to stretch out. Four First Class seats will be sold in advance with another four being held until the date of departure. Those will only be available if Berlusconi doesn’t use them for himself and his companions. (Curtains will be installed to separate this from the rest of the cabin.)

The airline will also start canceling and delaying more flights. As you can imagine, this is only going to make losses grow at the airline in the short run. But management is confident that when people see how stylish it is to fly with Alitalia, they will start to pay double for their tickets.

The airline’s Elevate frequent flier plan will be renamed UnoMiglia and a reciprocal agreement with Alitalia’s MilleMiglia program will be introduced on June 1 when the official transition happens.

And a happy April Fools’ Day to all.

[Original Alitalia photo via lsantilli / Shutterstock.com]

I know you were expecting a follow up post to Tuesday’s discussion about Farelogix, but that’s going to have to wait. Very soon after my post went live, Sabre sent me a note to say that “Much of what was ‘mocked up’ by Farelogix is already being done today by Sabre.” I’m talking to them tomorrow. So look for that post (or posts) next week. Instead, today we’re going to talk about one of my favorite topics that has been neglected for too long….
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For years, Alitalia was my favorite topic on the blog because of the complete incompetence of management. Time and time again, the airline found itself in terrible shape and nobody could do anything about it. But then the government stepped in and merged it with Air One forming a big Italian airline that was supposed to be profitable and stable. Though that whole “profit” thing never really worked out very well, the drama subsided and Alitalia became boring. That appears to be changing and I’m excited. The airline can once again resume its rightful place at the Worst Airline Ever. Hooray!

So, what’s been going on since the last time I wrote about the airline more than two years ago? Ah, well, more of the same garbage.

Alitalia just reported its results for the full year 2012 and it posted a loss of about $366 million for a net margin of just shy of -8 percent. Ok, ok, so about a third of that was an extraordinary item related to fleet renewal but it’s still terrible, and it’s way worse than the roughly $90 million loss the year before. But hey, the airline says it broke even in the fourth quarter. Hmm.

You’d think with a breakeven fourth quarter, things would be looking up, right? I’m going to say no, especially since CEO Andrea Ragnetti was just canned. Oh wait, I’m sorry. Ragnetti and the company “have mutually agreed to terminate their relationship.” In other words, he would like to spend more time with his family, go fishing, or, um, enjoy his retirement years despite the fact that he’s only in his early 50s.

Meanwhile, the airline is looking for someone to step into the hot seat. This person must be calm under pressure and be able to get everyone to support him no matter what he does. Wait, I know… Silvio Berlusconi! Hmm, looks like he’s busy with politics again, so they’ll have to keep looking. How Italians have somehow come to support this man again, I have no idea. But, well, this is Italy. And we’re getting off topic.

Things just don’t look good for Alitalia as it stands today. The airline was able to improve its load factor last year but only to 74.6 percent. It looks to me like the airline has too much capacity out there, but I assume national pride is getting in the way of doing the right thing. Meanwhile, that national pride has eroded enough to actually hurt Alitalia’s competitive position through loosening protectionism.

The Italians had previously only allowed Alitalia to fly the lucrative Milan/Linate to Rome/Fiumicino route with other airlines having to use Milan/Malpensa. Fares were high and flights were plenty. It was as if only one airline was allowed to fly between Boston and New York/LaGuardia with all others forced to use JFK. But that changed late last year when easyJet was finally given access. That was a big blow to Alitalia. After all, the easiest way for it to compete is when it doesn’t have any competitors.

Where does Alitalia go from here? Well I can’t imagine the airline going out of business. In fact, I wouldn’t hesitate to fly Alitalia at all. I hear the new business class is actually quite nice. But the airline is still going to need some help.

All signs point to an eventual takeover by partner Air France/KLM. This is a marriage that makes the American/US Airways courtship seem positively short. The airlines have flirted for years, but acquisition efforts have been blocked by those too proud to allow the French to own Italy’s national airline. If I were Italian, I’d be happy somebody else wanted to take the stinker off my hands.

Will the Italians finally realize that an acquisition by Air France/KLM is probably its best hope? I have no clue. But until then, I’ll gladly keep watching what is still my favorite airline to mock.

It’s time for an Alitalia update, and I can’t say I’m happy about this one. Not only is Alitalia making money, but it may try to sell itself to Air France/KLM (even though success seems unlikely). This airline just haven’t given me much to work with in the way of screwing people over lately, and that’s no fun at all.

By the way, just to set the record straight, Alitalia is still the reigning Worst Airline Ever. You might recall the recent post where Mexicana became the new holder of that title, but Mexicana is gone. And as we all know, if the winner is unable to fulfill its duties as Worst Airline Ever, the runner-up steps into its place. So, Alitalia, welcome back.

But Alitalia isn’t acting like the airline that we used to know and hate. In fact, in the third quarter, Alitalia made €39 million. I realize that in this climate, every airline should be able to make money, but if you want to be the worst airline ever, certainly you should still post a loss. And the load factor climbed to a somewhat-respectable 76 percent. Ah, come on. That’s just not right.

At least the first 9 months of the year still showed up €125 million in the red, so there is hope that this is just a temporary blip. But what if Alitalia doesn’t stay around long enough for us to know for sure? Apparently, CEO Rocco Sabelli is revealing in an upcoming book that he’s going to try to sell the airline to Air France/KLM, an airline conglomerate which already owns 25 percent of Alitalia.

Now, this has been a possibility for ages. With Alitalia a member of SkyTeam and firmly entrenched in the Air France/KLM sphere of influence, a takeover seems quite logical. We’ve seen Lufthansa do it with airlines like Swiss and Brussels. It takes over airlines but runs them separately. I wouldn’t be surprised to see that happen with Alitalia.

But Rocco does say in this book (what kind of weird book is this?) that he thinks shareholders won’t go for this anyway. Whew. Without Alitalia around, I wouldn’t know who to pick on. Other bad airlines (like Mexicana) actually go away, but Alitalia, like a diamond, is forever. Then again, if Alitalia keeps up its recent performance, I may have to go fishing for another candidate here. Aerolineas Argentinas, you busy these days? It might be time to pay a visit.

I never thought things could get any worse for Alitalia, but they have. No, no. It’s not that they’re performing worse. It’s that they’re no longer feeding me with excellent fodder to support my claim that they’re the worst airline ever. It’s really a drag. But fear not, there are still some gems out there that make me reluctant to remove that title just yet.

Alitalia has, without question, been performing better, but that’s a relative term. In the first quarter of 2010, the airline lost a mere €125 million. I know, still awful, right? But that’s better than the €210 million loss in Q1 2009. Most of that is probably coming from filling an terrible 64.5% of seats as opposed to last year’s frighteningly terrible 52%.

The airline has also just joined the Air France/Delta joint venture. I joked with someone that it must have made Air France and Delta an offer they “couldn’t refuse.” Last time Delta CEO Richard Anderson flew on a flat bed on Delta, he probably woke up with a horse’s head awaiting him.

Why exactly am I writing about them if the news isn’t that bad? Well, I saw this interview with the awesomely-named Antongiulio Zecchini, Alitalia’s network planning manager. Maybe it’s a language barrier, but I found it to be quite confusing. When asked to explain the dual airline Alitalia/Air One strategy, Antongiulio said this:

Alitalia is now hubbing at Rome Fiumicino and optimising Milan operations to serve the main local markets. It also serves premium flows in Linate, taking care of the time-sensitive flyers from/to (Milan) Linate city airport and long-haul operations.

While Air One is the ‘smart carrier’ dedicated to short and medium-haul price-sensitive travellers from/to Milan Malpensa and competes with low-fare carriers.

Alitalia’s integration with Air One also brought a legacy of bases in the Italian province. As well as feeding the long-haul network, priority has extended to covering routes bypassing Rome and Milan, to better serve customers along the Italian peninsula.

Ok, so lemme get this straight. We know that Rome/Fiumicino is a hub. Milan Linate is just for the “premium flows” – heavy shorter haul biz traffic markets, I assume. Malpensa is served by Alitalia on the best routes while Air One serves the rest of Malpensa by going up against the low cost carriers. It’s also looking to beef up the domestic markets that don’t touch Rome and Milan. So it’s a huge mix of point-to-point and hubbing.

I think I get it, but then he goes and contradicts himself by saying that Alitalia codeshares with Air One to feed intercontinental operations at Malpensa. That sounds like a hub. But if it is a hub, it’s not doing a very good job, because Alitalia keeps moving other short haul services to Linate. This dual airport thing in Milan is just killing that city. If that’s not enough, there’s Milan Orio Al Serio as well, and Air Italy is serving that. Yep, Alitalia is codesharing with that airline now as well.

I mean, Milan isn’t even a huge focus for the airline. That’s supposed to be Rome. Meanwhile there are all kinds of efforts to grow the airline outside of Rome and Milan altogether in other Italian cities as well.

And we haven’t even talked about the fleet yet. For shorter haul, the airline is finally getting close to ditching its last MD-80. But there is still a split fleet between the A320 family and 737s. Let’s not forget it also flies Embraer 170s and CRJ-900s. Nice of them to sample each manufacturer. (Yes, it’s even believed that there will be an order coming soon for the Sukhoi SuperJet.)

On long haul, there’s a motley mix of ten 777s, six 767s, and two A330s. The A330s are being used from Malpensa while the rest of the fleet seems to be in Rome.

Got that? I swear, this airline is in a strange place. On the one hand, it needs to do a lot of work to get in better shape. On the other hand, it seems to be trying to do too much at once. I have no idea how to fix that, but hopefully that means it will provide me with good fodder for years to come.

Ah, spring. The days become longer, the temps get warmer, and, apparently, it’s a great time for airline strikes. Lufthansa pilots just struck for a day and postponed the rest for later. Meanwhile, British Airways is on deck as the French air traffic controllers wreak havoc in their own country. And don’t worry, Alitalia has struck in the last week as well, of course. What the heck is going on here?

With Lufthansa, the pilots aren’t happy so they walked out yesterday. That left the airline canceling about half their daily flights and plenty of passengers stuck going nowhere. Last night, the pilots agreed to suspend their strike until March 8 so they could rejoin talks. Of course, that doesn’t mean that Lufthansa will magically start operating at full speed today. It takes a little while to get everything back into place for a normal operation, so check with the airline if you’re flying.

As for British Airways, well, we’ve talked about this one before. Remember that the BA flight attendants were going to strike over Christmas but then the courts told them to screw off because of some voting irregularities. Well, they’re back and now with a new vote showing 83 percent support, the strike could come with only a week’s notice. At least they’re promising it won’t disrupt Easter flying. Not sure why Christmas was ok but Easter isn’t, but I’m not complaining.

The French air traffic controllers? They’ve been on strike this week and have hurt a lot of the air traffic running through the country. For example, Air France has announced that today it will operate all its long haul flights but only 75 percent of European flights will operate from Paris/de Gaulle with only 50 percent from Orly.

Why do we keep seeing all these strikes? Well it’s more of the same. It’s usually an issue of job retention, outsourcing, and of course, pay. The problem is that the industry today is not what it was 30 years ago when pay was high and so were fares. Some airlines have been able to adapt but none have done so without serious pain for most involved (except of course, those insanely-misguided CEOs who think that taking a big bonus in the face of all this pain is a good idea).

What we’re seeing now, however, is two different types of unions based on how they react. The labor unions that realize that this is unfortunately a necessary change will be in better shape because they can participate in the discussion and work to find ways to help reduce costs with the least amount of pain to their members. Those unions that simply want to strike if they don’t get everything they want, no matter how delusional, will end up watching from the outside as the industry changes without their participation.

As a result, customers end up suffering, of course. If your flight is canceled because of a strike, then I would just cancel and rebook at a later date if you can. If you need to be there, well, you can look at other airlines but they will be bursting at the seams trying to accommodate everyone. Just remember that a strike doesn’t mean the airline shuts down. Most airlines are able to get together enough of a skeleton crew to operate at least some flights, as Lufthansa showed by operating half theirs. But running only half your flights is still a recipe for lots of stuck travelers.

Oh, and Alitalia? Well it’s hardly worth mentioning, but they struck on February 16. Ho, hum. Nothing to see here.

[Original Photo via Steinsky on Wikipedia]