Alitalia: EasyJet gives up and the horizon darkens

After Delta, which is cautious, EasyJet has clearly announced that it does not want to participate in the takeover of Alitalia.

So Alitalia has been up for sale since September 2017 and nothing seems to indicate that the Italian airline will not continue to dig its hole alone and drink the chalice to the lees.

The Italian government: a deterrent for investors

Lufthansa has shown interest, but it is out of the question for the Germans not to be the sole master on board and to take over a drunken ship with a large number of employees. Clear refusal of the Italian state not to keep the control alone or with Italian investors, refusal also to accede to the German request to keep only 60% of the workforce. Rather than engage on such a slippery slope, Lufthansa has therefore passed.

The second declared buyer is Delta, the leader of a consortium whose contours have varied over time. First on its own and then selling part of its stake to Air France-KLM once the deal is done, then in a consortium with Easyjet. Last week if Delta showed its willingness to help its “partner” (Alitalia is a member of Skyteam but especially of the Atlantic joint venture with Air France-KLM and Delta), the modalities have become more vague. Between the lines we understand that Delta wants to help but not necessarily through a participation. In any case not without being able to influence the strategy of the business….which brings us back once again to the demands of the Italian government and its protectionist position.

But today it is Easyjet that officially withdrawsfrom the operation leaving Delta alone.

In short, the Italian State finds itself with an airline riddled with debts, which continues to lose money with, on the other side, a single credible interlocutor who does not intend to pay to see or to do humanitarian work. If Delta invests, it is, logically, to get a return on its investment and not to continue to bail out Alitalia ad vitam eternam. No doubt the Etihad experience has been closely analyzed on the American side.

Alitalia has its back to the wall

What are the options now?

1°) Give in to Delta’s demands? The Italian government elected on a populist platform cannot afford to do so, and even less so during the European elections.

2°) Bring Delta to review its requirements? Delta is not the Salvation Army.

3°) Find another partner? Lufthansa will not come under these conditions, I think Air France-KLM has much better things to do and must learn to reform itself before trying to turn around an airline even more unreformable than it is. IAG ? IAG has withdrawn from the acquisition of Norwegian, at least a priori. In both cases, there is an airline to bail out, but Alitalia does not correspond to what IAG wanted to do through Norwegian (aiming at long-haul low-cost) and Norwegian remains an agile, resilient and reformable business with a less cumbersome state.

4°) Keep Alitalia andmop up until death.

What if the only solution for Alitalia was to file for bankruptcy and be reborn on a sound basis, or even through a sale by apartment? It is not excluded that potential buyers are waiting for this because time is on their side.

Image : Alitalia by Stefano Garau via Shutterstock