At 12:07 today Alitalia filed for bankruptcy or "amministrazione straordinaria” (extraordinary administration) in compliance with Italian law. The Italian government will now look to appoint commissioners who will assess whether the airline can be overhauled - either as a standalone company or through a partial or total sale - or indeed if Alitalia should be wound up altogether.
Are you at all surprised by this? I think the only surprise to some will be that Alitalia has hit the buffers before AirBerlin. Another factor in play as Alitalia goes into administration is that for the first time the airline is in jeopardy seeking government help when there is not a general election within 12 months. The Italian government elections are not until late May 2018. Does this mean the Italian government of today has more of a mandate to finally turn around and do the right thing – stay out of it, let the airline collapse and let the private sector reorganize and create something from the ashes of an airline that has from the very start been chipped away at and destroyed by unionised workers. Anyone who says that Alitalia was badly managed over the past few years is peddling untruths, it has nothing to do with it, the airline simply is completely unable to shed its 1970s & 1980s staffing level baggage, it has been prevented from reforming as successive weak Italian governments have pilled-in and “rescued” the airline at the cost of competition.
If the Italian government really wants to help its aviation sector and its economy in the process then it must ditch Air India-type throw money down the drain thinking and look to the far more intelligent way that Japan handled JAL in 2009-2011. Yes, the government saved the airline, yes, it skewed competition for a time and was horribly detrimental to ANA, but it saved the flag carrier and reformed the airline forever, allowing the government to step out of the frame at speed. Can the Italian government be so bold as to re-hire the entire Alitalia workforce on new contracts?
Meanwhile, the Alitalia services continue but forward bookings will tail off from today. Will Ryanair and EasyJet step into the breach with new additional services as they did with Malev? They should.
So where does all this leave the Etihad bonds that are linked to the airline equity investments? That is something worth thinking about.