Lufthansa Italia Tries to Add Pressure as Alitalia Receives EU Approval

Air France, Alitalia, Lufthansa, Mergers/Finance

Ok kids, who’s ready for an Alitalia update? I know, it’s been a little while. It may seem like plenty has happened, but really, we’re not that much closer to resolving this hilarious situation. One of these days, I’ll get around to making a mini-documentary that’s set to the Benny Hill theme music.

Alitalia Worst Airline EverSo what’s the latest? Well, CAI, the consortium of Italian businessmen, did agree to buy Alitalia for a little over €400 million plus another €600 million in debt. Sounds expensive, but it’s not when you consider that they just get to cherry pick the good parts of the airline that they want to keep. For example, they will only take 93 of Alitalia’s 173 aircraft and only about 60% of the airline’s employees will still have jobs. You know what that means. . . more strikes!

But alas, not all of the prized assets are part of the deal. It appears that Alitalia will be auctioning off its fine art collection. Yes, it had a fine art collection. Is anyone still wondering what’s wrong with this airline?

Anyway, the sale was supposed to be final earlier this week, but wouldn’t you know it’s delayed? Final approval was received yesterday from the EU, and the Italian government has now decided to require that 10% of all seats be sold at the lowest prices available this year. I can’t make this up.

They now say the deal will be signed on December 12, but CAI still needs to get its hands on Air One so it can merge them and relaunch the new Alitalia in January. Why the delay? Sounds like they might be having trouble getting all the cash together in a timely manner. I know I’d think twice before dumping that money into the pot.

We also still don’t know whether Alitalia will partner up with Lufthansa or Air France. Air France has been relatively quiet, but Lufthansa is using a rather unconventional approach to winning this bid. Lufthansa has decided to launch Lufthansa Italia with a half dozen A319s flying out of Milan. I suppose the strategy here is that if Alitalia doesn’t pick Lufthansa, then Lufthansa will just build its own airline to compete (and crush) Alitalia. We’ll see if that works out for them.

This really should have been resolved long ago, but I’m sure enjoying that it continues to drag on.

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16 comments on “Lufthansa Italia Tries to Add Pressure as Alitalia Receives EU Approval

  1. Can we also get similiar stories about Malev (based in Budapest, and owned by the Russian AirUnion who are themselves on the verge of bankruptcy and still alive only because the Kremlin is throwing money at them) and JAT Airways (based in Belgrade who have a bunch of 20-year old 737s and not a lot else) ? Maybe also LOT based in Warsaw and who had to shut down their LCC Centralwings this summer because it was losing so much cash for good measure ! Then I guess there’s Aer Lingus who are the subject of a 2nd hostile bid from Ryanair – with the difference being that the Irish Govt who own a slug of the shares are ready to say yes because the economy is not quite so healthy these days…. Then there’s SkyEurope a LCC who are surviving only because of a 25 mn euro loan payable on 15 Dec from a hedge fund. Of course, I haven’t even mentioned Olympic. You never knew Europe could be such a rich source of troubled airlines ?

  2. fine art collection????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

  3. I rarely fly Alitalia so I kind of hope this farce continues, I think Alitalia might be my favourite subject of your posts. I mean seriously I didn’t think it could get any more ridiculous/italian but a bankrupt airline with a fine art collection is genius.

  4. “Lufthansa will just build its own airline to compete (and crush) Alitalia”

    Hmmmmmm….Lufthansa…..Germany, right? Hmmmmmm. Just thinkin’ outloud.

  5. I’m with you Jay. But Germany and Italy were friends. It’s the takeover of Austrian that scares me. LOT over in Poland better watch out. . .

  6. Meanwhile Bolivia is starting a government-owned airline and Argentina is nationalizing Aerolineas Argentinas all while LAN overs a private alternative.

  7. I think that part of the reason that Lufthansa is starting their new Italian airline is to have it focus on Milan as a hub. Alitalia is going to scale way back it’s service to Milan and basically keep Rome as its main hub now, isn’t it? Lufthansa does a lot of business in northern Italy.

  8. Yes, good point Roger in LB. This is Milan-focused and Alitalia has been pulling back there in favor of Rome. But I still have to think that if Alitalia chooses to go with Air France that Lufthansa will keep marching south. This says to me that they take Italy very seriously as an important place for them. Don’t you think?

  9. CF – I read somewhere that Italy is one of LH’s most important country markets. In any case, they already own 99.9% (or maybe 100%) of Air Dolomiti who provide a lot of feeder traffic from N. Italy to FRA + MUC. The money is in Milan and surrounding areas, the Govt is in Rome. The largest carrier at Milan-Malpensa is currently easyJet. There are far too many rich pickings for LH to be had in Milan to think about expanding further south. Why would LH want to go head-to-head against AF (who would essentially have their own large hub) from Rome on lower yield markets ? Things like OS, SN, BD and possibly SK and LO will keep LH busy for a long time

  10. David – I suppose we’ll find out as time goes by, but I would think that they’d still be interested in Rome, even if it’s a smaller presence. As you say, Italy is very important for LH, especially considering its proximity to its Munich hub. There’s no question in my mind that these guys want to own all of Europe.

  11. I’d just like to say, bravo. I know that the Aitalia fodder to you is like politics as a topic for late night show hosts, but I wanted to you to know, this whole post really did make me crack up. I’m a bit late to the party (been out of commission and away from the dear Crackberry), but I was just in awe about it all. Being married to an Italian, it just makes me shake my head and laugh. Oh those crazy Italians! You should definetely do the Benny Hill viral video. I know I’d be heartily entertained!

  12. I am an Italian born American citizen (since 1972), living in Chicago area.
    I can only think of one thing that is funnier, sadder, and a more tragic story than Alitalia’s demise (It was very good in 1970s to mid 80s! on my visits back to Italia). That is the government of the state of Illinois and the city of Chicago over the past 2 years. I do not think that the most brilliant comedy writers in the world could possibly conceive stories as these which have unfolded since 2007 ! I cannot wait to see what happens next!

    As for Alitalia, I have not flow it since 1990 even though I went to Itlay 4 times since then. They flew may elderly parents in 1990 to New York instead of Chicago, saying not enough people to Chicago even though was suppose to be direct flight Milan – Chicago and Alitalia rerouted a few minutes before the flight.
    Parents had to go to Kennedy airport and walk massive airport late at night to barely make a connecting flight. They told me never fly Alitalia again and I have and will not. Never forgot how rude and arrogant US Alitalia agent was.

    Arriverderci Alitalia!!! Faliete!!

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