Is it the end for Alitalia or…

It had been known that Alitalia was in urgent need of funds before the end of the year if it was to survive but the move of a fuel company to stop all further supplies if payment was not made within a few days was rather a surprise. Alitalia had already been passing the begging bowl around its shareholders but they had displayed a remarkable reluctance to get their hands out of their pockets. In the case of Air France/KLM this was at least partly because they really do not have any cash spare. Etihad were rumoured to be the white knight waiting in the shadows but, if that was the case, they were playing a remarkably good waiting game.

Then, in true Italian style, it was announced that the Italian Post Office would make an investment in the airline. Once again, the airline had been saved at the last minute.

Well, let’s just say saved until the next crisis.

Other shareholders still have to stump up their share of the cash and the Post Office deal looks such a blatant example of illegal state aid that Brussels is bound to investigate. The important thing is that the Post Office deal keeps the airline afloat for a few more weeks but, during that time, something serious has to happen.

If the airline was in such a dreadful state at the end of the peak summer period, what will it be like after the loss-making winter? A bit of cost-cutting will not work.

The airline has a little while to find an ultimate solution. The most obvious one is for Etihad to purchase a sizeable share but it is hard to see if they are really interested and waiting for the price to drop still further, or if they genuinely do not want to get involved.

If no other radical plan is found, the wheels are going to come off. Brussels could well block the Post Office deal and, even if it does not, the airline will probably have run out of cash again.

Even in the worst crises of the past, I have always expected that Alitalia would somehow survive. The Italians would find a way. But those days are over. If the Italians can say goodbye to Berlusconi, they can do the same to Alitalia. There are few sacred cows any longer.

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