Alitalia enters bankruptcy as staff strike against job losses

04 July 2017 Consultancy.uk

Troubled airline Alitalia faces a tumultuous future, having recently filed for bankruptcy proceedings. This follows the rejection by staff of a turn-around plan, crafted by Roland Berger in consultation with the company’s executives. With no clear solution in sight, the situation remains deadlocked while a special administrator appointed to chart the way forward for the ailing company.

After a decade of management miscalculation, Italy’s flagship airline Alitalia, has once again found itself making headlines for the wrong reasons, as strikes grounded 200 flights on the 28th of May. The airliner had, in recent years, failed consistently to turn around its flagging profits – initially filing for bankruptcy in 2008, before being handed a temporary reprieve by a bailout from Air France KLM in 2009. By 2014 the company was again on the brink, with airliner Etihad then purchasing a 49% stake, granting another temporary reprieve as the airliner again threatened to collapse.

Alitalia files for bankruptcy after rejecting plan

Since the entry of Etihad, Alitalia brought in Roland Berger as advisors, and the professional services firm worked with the company’s management to develop a turn-around plan for the airline, however the professional services company’s advice proved highly unpopular.

Alitalia sought to improve its competitive position over low-cost airliners, by upping the number of seats on its aircraft, as well as a number of commercial changes to improve revenue while strategically cutting services.

Meanwhile, in a plan widely condemned by staff, Alitalia and Roland Berger revealed a “$2.2 billion” saving scheme to shareholders that involved cuts in pay and conditions, along with over 1,700 job-losses. The resulting strike action looks set to continue, with management unwilling to back down, and workers unable to, threatened by the prospect of unemployment amid a struggling Italian economy.

The failure of the airliner to complete its plans in the face of this mounting pressure has resulted in it entering bankruptcy procedures once more.

The move into bankruptcy is unlikely to affect passengers in the near term, however, the future of the airliner remains uncertain – the Italian government is weary of stepping in to bail out a private company, and has so far shown no interest in nationalising the company. The proceedings mean that a special administrator will be appointed, whose role will be to rescue the airliner if possible, or begin liquidation if no other way forward is found.

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