New Alitalia's business plan to arrive by Christmas, takeoff not before spring
This may sound like a paradox, but it is not: without Covid-19 Alitalia would have been doomed, we could even say that the [...]
Alitalia
LIN
This may sound like a paradox, but it is not: Without Covid-19 Alitalia would have been doomed, we could even say that the coronavirus saved the Italian company, which has been in receivership for more than two years.
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First seduced and abandoned by the brave captains in 2008 and then plucked and abandoned again by Etihad, it would not have had the slightest chance to rise again without going through nationalization, which Brussels and EU market rules would never allow. Alitalia, without the global pandemic that has thrown all the world's airlines into crisis, would thus have gone to an inglorious end.
The Covid-19 changed everything in the aviation world. We went from an industry that was grinding out passenger records and ordering more planes than Airbus and Boeing were able to produce, to a situation where airlines first laid off tens of thousands of workers, then decommissioned hundreds of planes, and finally forced each government to step in to save what could be saved.
It is in this scenario that Alitalia has an opportunity to get back into the game. thanks to the general misfortunes that weakened almost all of the companies, except the low-cost ones, and made possible the rebirth from the ashes by going through nationalization with an accompanying 3 billion euro transfer.
Why today Alitalia has a chance to fly again
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The national airline-now back to being state-owned-will be able to take advantage of 4 key factors:
- Airlines around the world have canceled orders for dozens of planes and postponed, by years, deliveries. This makes it easier to renew the fleet, which in AZ was one of the oldest and most uneconomical around, and to get major discounts from manufacturers who right now have to keep assembly lines running and deliver planes they would otherwise keep on the aprons rusting.
- The second wave is forcing all airlines to revise their restart plans. This situation indirectly helps Alitalia by allowing time for top management to better define the business plan.
- Alitalia was very weak in the business sector, the most profitable one for traditional airlines. This sector, however, according to all analysts, will be the one that will start flying again later and in any case less than before, the lack of these passengers will be a detriment to competition and much less to Alitalia's balance sheet.
- The intercontinental network has always been "reduced" than all direct competitors precisely because of inadequate fleet and unfortunate agreements within the Sky Team alliance. AZ, therefore, could on the one hand try to win traffic to Italy from tourists interested in visiting our country and Europe and on the other hand make Fiumicino a HUB for all users in the Mediterranean area, stealing passengers from Paris, Frankfurt and London. Just as it has done in recent years by TAP Portugal.
Certainly there is a need for politics, now that it has already parceled out the seats on ITA's new CDA, to step aside and let the managers do their jobs. The first steps, guiltily late, have been taken: appointed the CDA and signed the decree that brings in dowry money for revitalization. Now the last hurdle needs to be overcome: getting the green light from Europe and avoiding state aid proceedings.
The new fleet
Today, Alitalia has an aging fleet, which is deficient in long-haul assets and is succumbing to leasing contracts at out-of-market costs. By the end of the year, Caio and Lazzerini, president and CEO respectively, will outline the business plan, which will not start until spring at the earliest, since they will have to conclude the acquisition of the old Alitalia's assets, obtain all the licenses and, above all, recover the slots, i.e., takeoff and landing rights, as well as find the new planes to put on the runway.
It will start with fewer than 90 planes, About 20 for intercontinental routes. As mentioned in the summer they will target Airbus for short-medium range (A220 and A320) and Boeing for long range (787), a choice that turns the nose up at those who believe in the single-supplier model to optimize operating costs, but one that also takes into account the Italian system given that parts of the Boeing 787 are manufactured in our country, and where Airbus has so many suppliers for the components of its aircraft.
According to the guidelines of the plan, the mission will be long and medium haul -- routes with higher profitability -- without chasing low cost, having Fiumicino and Linate as main hubs for international and intercontinental connections. North America, Latin America, Japan will be the long-haul destinations, so New York, Boston, Los Angeles, Miami and Tokyo. In medium haul, routes in Europe and of course some Italian cities would be covered.
The goal is to take advantage of the market restart and insert itself into the difficulties of others by also going for routes where planes with the winged arrow on the fuselage have not landed for years and in some cases have never landed such as China, Thailand, and other Southeast Asian destinations, as well as a decisive push in the U.S. market, the most popular and profitable one, not forgetting South America routes where AZ has always performed well.
The millemile program
The loyalty program is one of the few sources of income for the company's balance sheet, 5 million members and about a hundred partners who buy from the company the miles that are given to users. In recent months it has been first miles deadline extended and then they were renewed One year's elite statuses to pander to travel misses Because of Covid-19.
Cargo as a vehicle for revival
In these pandemic months, the cargo sector has partially bailed out the airlines' coffers, not only with dedicated aircraft but also with passenger planes adapted to meet the surplus demand.
Alitalia for years abandoned this sector, only recently re-entering it, and this is a paradox in a nation that aims to export its products and which today end up enriching the holds of companies competing with AZ. At last cargo planes will return to fly and thanks to this the redundancies, which will be several thousand in any case, can be contained on the one hand, but above all the positive items in the budget can be diversified.
A maintenance hub could emerge, making synergy with Leonardo, aiming to become a reference for other companies as well, thus competing with Lufthansa Technik.
The choice of international alliance
What are international alliances we explained it in this article, Alitalia has always been part of Sky Team. Today even this marriage is in question and perhaps it would be time for the new CDA to look at One World or Star Alliance.
I personally believe that Alitalia should flirt with everyone and then stay with Sky Team and get equal rights and duties of Delta and Air France KLM in terms of route freedom, revenue share, and internal powers.
Alternatively, an alliance with Star Alliance/Lufthansa might also be the best marriage with a view to conquering the Southeast Asian market.
