Two years ago, the debt-laden Alitalia, that had been a state-run company for more than 60 years, was bleeding up to 3 million of euro a day on rapid rise in fuel costs. In a struggle to avoid bankruptcy, the carrier auctioned its paintings that would hang in its first-class and VIP lounges to reduce loss. In a surprising move, the Italian carrier posted a better-than-expected performance in 2009 and said it should break-even in 2011.
Early 2009, Italy’s state-run airline was sold to private investors: 75% to Italian investors and 25% to Air France. “The only purpose of going under private ownership was to cut costs. This way, you can have better prices and gain competitive edge”, Marco Rottino (photo) Alitalia’s country manager for Romania, Moldova and Bulgaria told Wall-Street in an interview.
The first and most important step in slashing costs was the massive staff reduction. “From 20,000 workers now we have only 13,000. Even in case of Tarom, a potential sale to private investors would bring about a severe workforce cut”, said Rottino.
On the other hand, the financial crisis had opposite effects too: Malev moved back under state ownership. The Hungarian government acquired 95% in the airline carrier from its majority shareholder, a Russian bank, after its last attempt to sell the carrier to private investors had failed.
Another area the carrier cut back on was the fleet. “We ordered 90 Airbus A330 (for long-haul flights) and Airbus A320 (for medium-haul flights), that will be shipped 1-2 a month until 2013, when we’ll have the newest fleet in Europe. As soon as it completes, old aircrafts will go out of operation. The new aircrafts will allow us to cut fuel and pollution costs”, said the head of Alitalia.
After its old aircrafts cease operation and the 90 Airbus are shipped, the company’s fleet will comprise 157 aircrafts instead of 148.
One year on since the sale to private investors, Alitalia carried 21.2 million passengers, and recorded a load factor of 65.5%. “In 2009 we recorded a loss of €210 million, less than we had expected, and we actually achieved a return to profit in the third quarter. This year, we expect losses to come in below €200 million and to break even in 2011”, said the representative of Alitalia.
Alitalia is not at risk of going back to state’s arms, like in the case of Malev. “Shareholders cannot sell their stakes in the company for three years”.
Romania – flashback to the 10% market share
Even if Italy is the most popular travel destination from Romania, the airline carrier has a modest presence in the market, with only 19 weekly flights. “In Romania, we decided to target business traffic and not enter the low-cost market, like Lufthansa did for the ethnic traffic”, said Rottino.
For the time being, Alitalia flies from Bucharest to Rome, Milan, Bari and Venice, with 14 of the 19 flights being operated in code-share system with Tarom.
“We don’t plan to introduce new flights or to increase frequency of the existent ones, at least until October. The next move will probably be the introduction of the third daily flight to Rome, most likely in 2011”, he added.
The airline carried 90,000 passengers to and from Romania. “At the end of last year, we had a market share of 2.7% in the airline market, and 4-5% in the Romania-Italy segment.
Alitalia expects to carry 100,000 passengers in 2010, which correspond to a market share of 4%. “Year to date, we carried 23,000 passengers on Romania-Italy routes, 7% more than in 2009”, Rottino pointed out.
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