Alitalia Reborn - But will it Survive?

Today the 13th January 2009 Alitalia is officially reborn. Now owned by the Investor Group Compagnia Aerea Italiana, shorn of its non-Airline Operating activies and having absorbed the commercially oriented and efficient Air One, the new slimmer Carrier is officially relaunched.

Also although not yet signed and sealed, the Air France-KLM offer to take a 25%, 320 million euros stake in Alitalia seems almost a certainty. The previous front runner for this investment, Lufthansa, lost its position when it annouced it was starting its own Italian Airline, Lufthansa Italia. Although Lufthansa may, even at this late stage make a bid to top Air France-KLM, this seems unlikely.

Whilst it is a miracle that Alitalia has reached this point (the Pope's prayers for the Airline seems to have helped), and the investment from Air France-KLM (or Lufthansa) will keep the company going for a while, the factors that will determine whether Alitalia has long term future are complex and many are not under its control.

• The ongoing Global Economic Crisis and its effect on the Airline Industry.
• The new labour contracts with the Alitalia Unions must produce the cost savings and productivity they are designed to produce.
• Those same Unions must not revert to their old ways of immediately launching crippling strike action whenever a problem, however minor occurs between them and the company.
• How Alitalia copes with the new commerical realities with Ryanair increased presence in the Italian Market and the launch next month of Lufthansa Italia, which will cement Lufthansa's already major presence in Italy.
• Currently Alitalia is a member of the Skyteam Alliance (includes Air France-KLM), but due to not integrating its computer systems, it does not maximise the benifits. It also retains a 'foot in the door' with the Star Alliance (includes Lufthansa). Once the 25% Stake deal is signed, upgrading and profiling the Computer Systems has got to be a major priority.
• Getting Passengers to Fly Alitalia is also going to be a major problem. The frustration over the Airlines history of long delays, cancellations, poor in-flight service, and a 'take it or leave it' attitude when dealing with customers, is a major hill to climb, in regaining passenger loyalty.
• Although it no longer controls its Ground Handling and Heavy Maintenance operations, industrial action in these organisations will be just as crippling to the new Alitalia, as it was to the old one (70 Flights from Rome were cancelled due a Ground Handling Strike last Wednesday).
• Finally, the European Low Fares Airline Association filed a complaint with European Commission last Thursday over the €3 tax, levied since October on passengers leaving Italian airports under Italy's "Save Alitalia decree," amounted to €100 million of
  illegal state subsidies to Alitalia each year.

So will Alitalia Survive in the long term?
As an independent entity, probably not!
As the Italian Division, after been absorbed by a major European Carrier, probably yes!

Other Posts on Alitalia in this blog:
06th October 2008:
Alitalia - Is the Opera entering its final act?

13th September 2008:
Alitalia - Have the Unions Killed the only hope?

29th August 2008:
Alitalia Files for Bankruptcy Protection

29th July 2008:
Alitalia - How long before the life support is switched off?