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7JetSet7 Code: ALI
Status: Operational
Region: EUROPE
City: ROME
Country: ITALY
Employees 11400
Web: alitalia.com
Email: ufficio.stampa@alitalia.it
Telephone: +39 06 65621
Fax: +39 06 656 35874

Click below for data links:
ALI-2014-10 - EXPO MILANO 2015 A330-200
ALI-2015-09 - Pilot Training Cadets.jpg
ALI-Cabin Attendants - 2016-07.jpg
ALI-Cabin Attendants New Uniforms - 2016-05.jpg
ALI-VISIT ROME - 2015-04.jpg




The famous Mediterranean climate is a big draw here, along with food and affordable health care and insurance. Cost of living is reasonable, especially if you eschew the big cities. Italian government policy makes it pretty easy for Americans to get residency visas, so long as they don't plan to work in the country.

JULY 1995: 1ST 6 MONTHS = -$123 MILLION (-$142 MILLION) (NET LOSS).





JANUARY 1996: 1995 = -$276 MILLION/-# 85.9 BILLION LIRE (7TH YEAR LOSS): +2.9% PASSENGERS (PAX) (20.9 MILLION PAX), +7.6% (FTK) (FREIGHT TRAFFIC): TO CUT (-4%) (-694), TO 17,982 EMPLOYEES.

5TH A321-100 (CFM56-5B2) IN LAST YEAR.



APRIL 1996: 1 A321-100 (CFM56-5B2), & 1 767-300ER (CF6-80C2) DELIVERIES.












1996 = -$789 MILLION: 21.47 BILLION (RPK) (TRAFFIC) (#19 HIGHEST IN WORLD) (+8.8%).


FEBRUARY 1997: 2 A321-112'S (586; 593) DELIVERIES.












AUGUST 1997: The European Commission (EC) cleared an ITL2.75 trillion/$1.6 billion injection of state aid for Alitalia (ALI) at its July 16 meeting. The capital injection was whittled down from the original demand for ITL3.3 trillion and has several conditions attached, according to the draft plan, an official said. Alitalia (ALI) will have to sell its 35% share in Malev Hungarian Airlines (HGA) and the Galileo (CRS), divest its holdings in various Italian regional airports and rationalize fleet and staff to obtain "adequate return" on investment. This will include laying off -1,212 employees over four years from December 1996, leaving 16,178 staff and a freeze in fleet size at 157, rather than an expansion to 172 foreseen in an earlier restructuring plan. The (EC) extracted a pledge from Italian authorities that they would act as "normal shareholders" in relations with the airline and not extend any additional subsidies in form of loan guarantees.







4 ORDERS (1999) A320. SWITCHED 15 ORDERS A321-100 TO A320 (NOW 19 ORDERS A320, 8 ORDERS A321-100 & OPERATES 17 A321-100'S).



NEW ROUTES - MAHE, - JEDDAH, - NAIROBI (ALL 767-300), & - DJERBA (MD-82), SANTO DOMINGO - CARACAS (747-200 OR 767-300), - SAO PAULO - RIO DE JANEIRO (747-200).


A321-112 (765) DELIVERY.





LETTER OF INTENT (LOI) 3 (1999) 767-300ER'S, (GEH) LEASED.

APRIL 1998: 1997 FISCAL YEAR (FY) = +$248 MILLION (1ST +VE IN 10 YEARS!).


2 ORDERS (APRIL 1999) 767-300ER, (GEH) LEASED.




JUNE 1998: 11TH 747-200F, (TLS) WET-LEASED. 2ND (TLS) 747-200F
IN 8/98.

JULY 1998: 1 A321-100 (CFM56-5B2) DELIVERY.

EMPLOYEES (K): 18 IBE 22; 19 SAS 22; 20 ACN 22; 21 TII 22; 22 PIA 21; 23 AIN 19; 24 ALI 19; 25 VAR 18; 26 JAL 17; 27 KAL 17; 28 ANS 17; 29 SWS 17.

NET ($ MILLION): 12 AFA 314 (-28); 13 ACN 308 (109); 14 KLM 303
(-33); 15 SAS 283 (265); 16 ALI 256 (-780); 17 CINTRA 244.

(RPK) (TRAFFIC) (BILLION): 16 TWA 41; 17 KAL 40; 18 CAT 39; 19 ACN 37; 20 ALI 36; 21 TII 31; 22 MAS 29; 23 IBE 28; 24 SWS 28; 25 AMW 26.

PASSENGERS (PAX) (MILLION): 9 DLH 35; 10 BAB 34; 11 JAL 32; 12 KAL 26; 13 ALI 25; 14 TWA 24; 15 SAS 21; 16 QAN 19; 17 AMW 18; 18 JAS 17.

(FTK) (FREIGHT TRAFFIC) (B): 15 CLX 2.4; 16 AAL 2.4; 17 PAO 1.9; 18 SWS 1.8; 19 NCA 1.8; 20 MTH 1.8; 21 TII 1.6; 22 ALI 1.5; 23 EAF 1.4.



SEPTEMBER 1998: (IATA) ALITALIA (ALI) (FY) 1997 = +$157.94 MILLION.


767-300ER, (ILF) LEASED, DELIVERY, +2 ORDERS, BEFORE APRIL 1999, 767-300ER, (ILF), 1 NEW, & 2 USED.


FISCAL YEAR (FY) 1997 = +$157.9 MILLION.






A321-112 (CFM56-5B2) (940, I-BIXH) DELIVERY.




MARCH 1999: 1ST A320 DELIVERY (NOW, OPERATES 22 A321'S). $50 MILLION, 3 ORDERS ATR 72-500'S (JULY 1999).


2 767-300ER'S (CF6-80C2B7F) (30008; 30009), (GEH) LEASED.

MAY 1999: A320-214 (999) DELIVERY. A300B4-200F (173) TO (ICC) CANADA, (C-S) AVIATION LEASED.

MAY 1999: A320-214 (CFM56-5B4/P) (999, I-BIKE) DELIVERY.

JUNE 1999: PARIS AIR SHOW - 6/10 ORDERS ERJ-145 (AE3007). PLANS TO REPLACE 4 747-200'S, WITH 5 747-400'S (2001), FOR TOTAL $1.1 BILLION ORDER. 767-300ER DELIVERY.

14 ANA 33.38; 15 SWA 31.43; 16 CAT 25.26; 17 TWA 24.42; 18 ACN 23.21; 19 ALI 22.10; 20 TII 21.34; 21 IBE 20.19; 22 KAL 19.95; 23. MAS 18.25; 24. SWS 17.43.

AUGUST 1999: ALITALIA (ALI) GROUP FISCAL YEAR (FY) 1998 = +$217 MILLION (+$233 MILLION) (-6.9%): 35.56B (RPK) TRAFFIC (-1.2%), 24.18 MILLION PASSENGERS (PAX) (-1.5%), 68.9% LF (-2.8).









1 767-300ER (30342), GECAS (GEH) LEASED.


EXPECTS 5/3 ORDERS (MARCH 2001) 747-400.










1999 = +$11 MILLION.


TRAFFIC (RPK) (B): 16 TWA 41.9; 17 CAT 41.5; 18 ACN 39; 19 TII 38.5; 20 ALI 36.7; 21 KAL 36.7; 22 IBE 35.4; 23 SWS 34.7; 24 MAS 32.2; 25 AMW 28.5.

EMPLOYEES (K): 21 MAS 22.8; 22 IND 22; 23 TWA 21; 24 ALI 20.3; 25 EGP 20.1; 26 JAL 19.

(FTK) (FREIGHT TRAFFIC) (B): 20 SWS 1.95; 21 LAN 1.74; 22 TII 1.67; 23 BEJ 1.64; 24 ALI 1.61; 25 EAF 1.58.


AUGUST 2000: 1999 = 36.69 BILLION (RPK) TRAFFIC (+3.3%); 1.61 BILLION (FTK) (+8.3%); 24.05 MILLION PASSENGERS (PAX) (-.1%).











JANUARY 2001: 2000 = +3.3% (ASK) CAPACITY, +4.7% LF: DOMESTIC 66.3% LF (+.6), INTERNATIONAL 65.7% LF (+3.6).

16 ANA 36.07; 17 CAT 29.27; 18 TII 26.25; 19 ALI 25.24; 20 KAL 25.15; 21 IBE 24.87; 22 MAS 23.58; 23 SWS 21.28.

SOLD 747-243 (CF6-50E2) (22508, /80) TO ATLAS AIR (TLS).











2 A320-214'S (1473, I-BIKF; 1480, I-BIKG) DELIVERIES.




5 A320-214'S (1448; 1457; 1473; 1480; 1489) LEASED TO EUROFLY (EUY).







JANUARY 2002: 2001 = 36.52 BILLION (-11.9%) (RPK) TRAFFIC, -10.2% (ASK) CAPACITY, 70.8% LF LOAD FACTOR (-1.3); 25 MILLION PASSENGERS (PAX) (-6.6%); -12.2% (FTK) FREIGHT TRAFFIC.


1 UAL 116.60; 2 AAL 106.15; 3 DAL 97.60; 4 NWA 73.11; 5 BAB 64.24; 6 AFA 59.54; 7 CAL 58.76; 8 DLH 56.76; 9 JAL 50.77; 10 USA 45.93; 11 SWA 44.50; 12 SIA 42.76; 13 QAN 42.14; 14 ACN 41.49; 15 KLM 35.76; 16 ANA 33.16; 17 CAT 27.81; 18 TII 27.43; 19 IBE 25.64; 20 KAL 23.73; 21 ALI 22.45; 22 MAS 22.29; 23 AMW 19.06; 24 VAA 17.65; 25 VAR 16.02; 26 CHI 16.00; 27 EAD 14.37; 28 SAS 14.26; 29 ANZ 13.54; 30 SAA 12.70; 31 SVA 12.56; 32 BEJ 12.39; 33 ASA 12.23; 34 JAS 10.06; 35 THY 9.35; 36 AMX 8.51; 37 PAL 8.36; 38 GIA 8.15; 39 CMA 7.99; 40 ELA 7.79; 41 GUL 7.65; 42 PIA 7.24; 43 AIN 7.10; 44 TAP 6.43; 45 EGP 5.53; 46 OLY 5.24; 47 AUL 5.06; 48 FIN 4.93; 49 IND 4.52; 50 CQT 4.51.


2001 = -#EUR907 MILLION.







6 ORDERS (FEBRUARY 2003) ERJ-145'S AND 6/6 ORDERS (FEBRUARY 2003) ERJ-170'S. 3 A319-112'S (1722, I-BIMA; 1740, I-BIME; 1770, I-BIMO) DELIVERIES.

July 2002: ALITALIA (ALI) 2001: -$798.16 MILLION (-$241 MILLION): 36.52 BILLION (RPK) TRAFFIC (-11.9%); 70.8% LF LOAD FACTOR; 24.93 MILLION PASSENGERS (PAX) (-6.6%); 1.53 BILLION (FTK) (12.2%); 24,023 EMPLOYEES (+15.7%).

2001 Top World Airlines by Traffic (RPK) (Billion):
1 UAL 187.67; 2 AAL 170.88; 3 DAL 163.66; 4 NWA 117.66; 5 BAB 106.27; 6 CAL 98.37; 7 AFA 94.42; 8 DLH 86.70; 9 JAL 84.27; 10 USA 73.93; 11 SWA 71.59; 12 SIA 69.15; 13 QAN 67.89; 14 ACN 67.03; 15 KLM 57.85; 16 ANA 56.90; 17 CAT 44.79; 18 TII 44.04; 19 IBE 41.30; 20 KAL 38.45; 21 MAS 38.31; 22 ALI 36.52; 23 SWS 32.98; 24 TWA 31.85; 25 AMW 30.69.

A319-112 (1745, I-BIMI) delivery.

August 2002: Code share with AeroMexico (AMX), New York (JFK) - Monterrey, Cancun, Mexico City, Guadalajara, and Miami - Cancun, Merida, Mexico City.

To sell its corporate HQ building to the Peabody Group for EUR152 Million and lease the office space.

Is expected to sell 80% of subsidiary, Eurofly (EUY) to Volare (VLR).

1st of 6 777-243ER (32855, I-DISA), 42C, 249Y, deliveries, intended to replace 747-200's. Post-delivery modifications at Marshall Aerospace, Cambridge (MAC). A319-112 (1779, I-BIMU) delivery.

October 2002: Plans to lease +3 777's in addition to the 6 already ordered. The 777's will be used for routes to the Americas and Asia.

Palermo - Pisa (MD-80).

1 777-243ER (32856, I-DISE) delivery. A320-214 (1480, I-BIKG) returned from Eurofly (EUY).

November 2002: Rejected Volare (VLR) offer to buy Eurofly (EUY) to consider other offers, including management buyout.

Air France (AFA) and Alitalia (ALI) agreed to take a 2% stake in each other in January 2003. Expanded its code share with (AFA) for Milan, and Rome to Ancona, Bari, Brindisi, Catania, Palermo, and Trieste.

747-243B (575-22969) returned to Boeing (TBC). 1 order (October 2003) 767-300ER, and 3 orders (October 2003) 777-200ER's leased. 777-243ER (32857, I-DISO "POSITANO") delivery.

December 2002: A Dutch arbitration court has ordered (KLM) to pay Alitalia (ALI) # EUR 250 Million/$250 Million as a penalty for walking away from an alliance between the two carriers in April 2000. (ALI) was ordered to refund # EUR 100M to (KLM) for its investment in Milan's Malpensa airport.

Intends to take a 15% stake in the Volare Group (VLR).

Sold its tour operation Italiatour to CIT (TCI) for EUR 9.2 Million.

Plans to resume services Milan (MXP)/or Rome (FCO) to Beijing, Hong Kong, and Shanghai.

Luca Egidi, (CFO).

777-243ER (32858, I-DISU "Madonna di Campiglio") delivery.

January 2003: 777-243ER (32859, I-DISB "Porto Rotondo").

February 2003: Began passenger demonstrations of AirTV's in-flight Internet access, following a successful validationn on one of its 767's.

In March 2003, code share with SN Brussels (DAT), Belgium - Italy. Resumes Milan (MXP) - Warsaw (MD-82, 2/day). In June 2003, Bologna/Venice - Lamezia Terme/Lampedusa (weekly). Pisa - Lamezia Terme (MD-82, weekly). Turin - Catania/Palermo.

March 2003: Selected Jouve Aviation Services to provide an e-maintenance solution to support publishing and delivery of airplane maintenance information.

Plans for AirTV trial demos of bi-directional in-flight e-mail using Inmarsat Data 3, on 767 flights. Passenger trials will use a flat-rate pricing structure designed to maximize customer interest in this new in-flight satellite broadband service.

(ALI) GROUP 2002 = +EUR 93 Million/+$101.6 Million (-EUR 907 Million): -17.8% (RPK) traffic; -17.8% (ASK) capacity; 70.8% LF load factor; 22.2 Million passengers (PAX).

24,023 employees. (http://www.alitalia.com).

Code share with SN Brussels (DAT), Brussels to Bologna; Milan (Malpensa); Rome, Turin; and Venice. Rome (FCO) - Moscow (SVO) (A320, daily). Next month to resume Rome (FCA) - Caracas. In summer, Milan (MXP) - Shanghai (Pudong) (daily) and to Beijing by the end of 2003.

Air France Industries (AFA) has 7 year contract for component repair and spares for Alitalia (ALI)'s 10 777's. (ALI) Engineering & Maintenance has 5-year (AFA) contract for (APU) repair and overhaul of 20 747 classics.

April 2003: Giuseppe Bonomi, Chairman, ex-head of (SEA), the Milan-based airport administration conpany, replaces Fausto Cereti.

May 2003: Confirmed it obtained $544 Million in financing from USA Ex-Im Bank and Barclays (PLC) to buy 6 777's to add to 5 already operating on routes to Japan and New York.

777-243ER (32860, I-DISD "Cortina d'Ampezzo") delivery.

June 2003: Confirmed it intends to sell 80% of its Eurofly (EUY) charter unit by October 2003.

767-35HER (26389), ex-Air Canada (ACN), CIT (TCI) leased.

July 2003: 2002 = +$88.4 Million (-$812.8 Million): 30.03 Billion (RPK) traffic (-17.8%); -17.8% (ASK) capacity; 70.8% LF load factor; 22.2 Million passengers (PAX) (-10.9%); 1.38 Billion (FTK) freight traffic (-11.9%); 21,294 employees (-5.1%).

2002 TOP 25 WORLD AIRLINES - TRAFFIC - Billions - (RPK):
1 (AAL) 195.81; 2 (UAL) 176.15; 3 (DAL) 152.66; 4 (NWA) 115.91; 5 (BAB) 99.71; 6 (AFA) 96.80; 7 (CAL) 95.51; 8 (DLH) Group 88.57; 9 (JAL) 83.54; 10 (QAN) 75.23; 11 (SWA) 73.05; 12 (SIA) 71.12; 13 (ACN) 69.42; 14 (USA) 69.42; 15 (KLM) 58.89; 16 (ANA) 52.97; 17 (CAT) 49.04; 18 (TII) 48.51; 19 (KAL) 41.80; 20 (IBE) 40.47; 21 (MAS) 36.90; 22 (AMW) 31.98; 23 (SAS) Group 30.91; 24 (EAD) 30.17; 25 (ALI) 29.84.

Negotiations continue to integrate the privately-owned Sardinian airline Meridiana (ALS) into the Alitalia (ALI) Group.

Entered into a consultancy contract with Turn Works, a firm headed by Greg Brenneman, formerly with Continental Airlines (CAL) as (COO).

August 2003: Sells 80% of Eurofly (EUY), including 13 MD-82's (for low-cost operations) to Banca Profilo. The future of the (EUY) A320-200'S & A330-200's is unclear, but it is possible they will be retained for charter operations.

September 2003: 1st 6 months = -EUR 315 Million/-$353 Million (-EUR 49 Million), due to war in Iraq, the (SARS ) outbreak, and the general economic downturn.

Rome (FCO) - Sofia (MD-82, 3/week). Rome (FCO) - Crotone (MD-82, daily). Code share with Qatar Airways (QTA), Milan (MXP)/Rome (FCO) - Doha.

As it angles to avoid being left at the altar, should Air France (AFA) & (KLM) tie an equity knot, (ALI) is placing increasing emphasis on achieving a financial and operational restructuring that could increase its desirability to potential partners.

Alitalia (ALI) has engaged TurnWorks, the firm created by former Continental Airlines (CAL) (COO) Greg Brenneman, to guide restructuring under a 2-year contract, expiring in July 2005. 3 executives from the firm are taking direct roles in (ALI) management: Glen Hauenstein, Chief Production Officer (coordinating all passenger & cargo operations); Bob King, Head of Sales & Distribution Division; & Peter Van Kalkeren, to lead the "e-enabling" of sales & distribution, including e-ticketing and online booking.

Francesco Mengozzi, (CEO) is realistic that (ALI) may not be on the ground floor of the proposed (AFA)/(KLM) alliance. He stated "It will be highly beneficial if we could catch the train at the 2nd station. (KLM) & (AFA) could be at the 1st station. What is important is that we do take the train, and that the train arrives at the right destination. My dream is to have in the not-too-distant future, a common-management company that would incorporate the various national brands and preserve the cultural diversity of 3 or 4 different airlines. Privatization is the necessary tool to foster a real consolidation process, noting that the Italian government, which still holds 62.4% of (ALI) is committed to an early privatization of the airline to pave the way for its inclusion in a future merger."

(ALI) sells 40% shareholding in its engine maintenance/repair subsidiary, Alitalia (ALI) Maintenance Systems to Lufthansa Technik (LTK) (DLH). Under the partnership, (LTK) will transfer mainly (CF6-50) engines to (ALI)'s facility in Rome, and (ALI) will send engine components to (LTK) in Hamburg.

A319-112 (2033, I-BIMB) delivery. A320-214 (1457, I-BIKD) returned from Eurofly (EUY).

October 2003: Code share with China Airlines (CHI), Taipei - Bangkok - Rome (FCO). In summer 2004, Milan (MXP) - Washington (Dulles), and Rome (FCO) - Boston.

(GECAS) (GEF) announced it accepted delivery of its first new 777 airplane, which will go into service at Alitalia Airlines (ALI) this month. The airplane delivered is the first of 18 777s on order from (GEF).

(GEF) placed its original order for the wide body 777 models in June 2000. Fourteen of the airplanes are under contract for lease to Emirates Airways (EAD). The remaining four are under contract for lease to Alitalia (ALI).

777-243ER (32783, EI-DBK "Ostuni"), (GECAS) (GEF) leased.

November 2003: Approved restructuring plan including laying off -1,500 excess personnel not involved in the operations areas of ground and flight front line of its 21,294 staff, and outsourcing another -1,200 jobs.

In a letter to employees to explain the Alitalia (ALI) 2004 - 2006 business plan (which included -2,700 layoffs), Francesco Mengozzi, (CEO) stated "Alitalia must cut costs, otherwize within a year and a half all financial resources would be used up and they would be condemned to a deep and perhaps irreversible crisis." The plan focuses on development and efficiency. States that 2005 looks like a reasonable date to merge with Air France (AFA) & (KLM).

Projects its capacity on its long-haul routes to increase by +33% in next summer's schedule, including new service Rome to Washington and Toronto (daily), Rome - Boston (5/week), & 2nd daily flights on its Rome - New York (JFK) & Rome - New Delhi. Its long-haul network will be operated with 10 777's & 13 767's that will replace 747's. Short- & medium-haul capacity will rise +8% with new flights to Copenhagen, Manchester, Stockholmm, and Luxembourg. The medium-haul fleet will comprise 89 MD-80's & 46 A320's. Will launch a new domestic route, Rome (Fiumicino) - Verona.

To convert 3 MD-11 Combis into full freighters and sell 2 747-400F's with extra engines and parts to Volga-Dnepr (VDA).

December 2003: In January 2004, Rome - Verona (MD-82, 2/day). In March 2004, resume Milan (MXP) - Copenhagen/Luxembourg/Manchester/Stockholm (ARN).

February 2004: May receive compensation from the Italian goverment, subject to European Union (EU) permission, if it cancels plans to cut -2,700 jobs.

A319-112 (2102, I-BIMH) delivery.

March 2004: Marco Zanichelli, (CEO), 56, is replacing Francesco Mengozzi, who resigned.

Milan (MXP) - Delhi (6/week).

The government is now studying a partial sell-off rather than a full privatization, a condition for any merger with (KLM).

Enters into an agreement with Computer Management NA under which Computer Management will provide Alitalia (ALI) with its Aries (AMS) system, which complies with all new USA Customs Air Automated Manifest requirements.

MD-11 (48431) sold to Lufthansa Cargo (LUB).

April 2004: 21,294 employees (including 4,418 Cabin Attendants (CA).


European Commission (EC) OK's an alliance between Alitalia (ALI) and Air France (AFA) after the carriers agreed to surrender 42 pairs of slots/day, 19 of which will come from Paris Charles De Gaulle (CDG) and Orly (ORY) Airports on routes between France and Italy. The alliance will give (ALI) customers access to >100 new destinations while (AFA) customers will be offered about 20 new routes. The agreement enables the two carriers to cooperate across their respective networks in terms of pricing, scheduling and capacity.

Rome (FCO) - Malaga (MD-82, daily).

747-243F (545-22545, VP-BIB) sold to Adventar, leased to Volga-Dnepr (VDA) for new Air Bridge Cargo operations. MD-11 (48581) sold to Lufthansa Cargo (LUB).

May 2004: The government is considering outsourcing 11,000 Alitalia (ALI) workers of 22,500 total to companies such as Alenia and Finmeccanica to avoid political repercussions if massive layoffs are undertaken. The government's rescue plan agreed to by (ALI)'s unions involves the resignation of Giuseppe Bonomi, Chairman, and Marco Zanichelli (CEO) to be replaced by Giancarlo Cimoli, Chairman & (CEO), 64, who was head of the Italian railways.

(ALI) will spin off its ground & service operations to receive a bridge loan guaranteed by the Italian government that will conform to European Union (EU) rules.

In July 2004, London Heathrow (LHR) - Milan (MXP) - Delhi Indira Gandhi (A321, UK - Italy, 767 Italy - Delhi).

MD-11 (567-48630) sold to Lufthansa Cargo (LUB).

777-243ER (32784, EI-DDH "Tropea"), (GECAS) (GEF) leased.

June 2004: Multiyear airport contract with SkyTeam (STM) partner Delta Airlines (DAL), whereby (DAL)'s Airport Customer Services Division will provide integrated airport services such as customer check-in, ramp handling and facility sharing to Alitalia (ALI) at Newark. This represents the first airport services insourcing deal with (ALI), who operate daily flights to Rome & Milan from Newark.

Amadeus acquires a controlling 55% stake in travel portal Opodo for EUR 62 Million/$74.5 Million in cash. Opodo was created by 9 European network airlines: Aer Lingus (ARL); Air France (AFA); Alitalia (ALI); Austrian Airlines (AUL); British Airways (BAB); Finnair (FIN); Iberia (IBE); (KLM); & Lufthansa (DLH) - - whose stakes will be reduced in proportion to the investment by Amadeus. The 3 biggest shareholders: (AFA); (BAB) & (DLH) - - will hold 10.3% each, while the shareholdings of (ARL) & (AUL) will be diluted to 0.51% each. Amadeus, which is majority owned by (AFA); (IBE) & (DLH), said Opodo will continue to operate as a separate company.

The Italian government OK's short-term bridge loan of EUR 500 Million/$605 Million for financially struggling (ALI) while the airline works out a new business plan.

SkyTeam (STM): Aeroflot (ARO) (applicant); Aeromexico (AMX); Air France (AFA)/(KLM); Alitalia (ALI); (CSA) Czech Airlines; Continental Airlines (CAL) (agreed to join); Korean Air (KAL); & Northwest Airlines (NWA) (agreed to join).

In July 2004, resumes Milan (LIN) - Athens (MD-82).

4 MD-82's (49212; 49214; 49215; 49218) sold to Eurofly (EUY).

July 2004: The European Commission (EC) approved EUR 400 Million/$493.5 Million bridge loan, which is warranted on the grounds of "serious social difficulties" as 22,200 salaried staff & 8,000 other jobs are linked to the company's future survival. The loan was granted at market rates and must be repaid in 12 months. Its use is limited to "what is needed to manage the company."

August 2004: German bank Dresdner Kleinwort Wasserstein is the sole lender for the EUR400 Million/$492 Million bridge loan to Alitalia (ALI) that will be guaranteed by the Italian government.

Fiscal Year (FY) 2003 = -EUR 190 Million/-$641.16 Million (-EUR 520 Million/-$273.08 Million). Its debt increased to EUR 1.6 Billion.

From 2007, plans to increase its fleet of medium-haul airplanes from 153 to 162, and long-range airplanes from 27 to 34.

Could face bankruptcy within 1 month if unions don't agree to a vast restructuring program.

September 2004: Initial proposed restructuring plan called for -5,000 job cuts, saving EUR 310 Million/year over next 2 years, and group would be split into 2 units: Alitalia (ALI)-Fly = focus on air transport; and (ALI)-Service = focus on support activities. The Italian government has undertaken to privatize the company in the space of a year.

After new labor agreements with all its unions were achieved, (ALI) was left with -3,789 job cuts which should achieve EUR 292 Million in cost savings/year.

Northwest Airlines (NWA), (KLM), & Continental Airlines (CAL) become the newest members of the SkyTeam (STM) alliance to join Aeromexico (AMX), Air France (AFA), Alitalia (ALI), (CSA) Czech Airlines, Delta (DAL), & Korean Air (KAL).

Thierry Aucoc, VP Europe.

Selects Boeing (TBC) & Air France Industries (AFA) for a joint component services support program for its 777's.

October 2004: Plans to spin off its air transport business without medium- and long-term debt to a new company called "AZ Fly" and said it is in advanced talks to sell a stake in (ALI) Servizi to government-owned holding company Fintecna. Fintecna will contribute up to EUR 300 Million over 4 years to the restructuring by subscribing to 49% of (ALI) Servizi's capital.

Rome (FCO) - Thessaloniki (MD-82, daily). In December 2004, Milan (MXP) - Shanghai Pudong (767-300, 3/week).

November 2004: Milan (MXP) - Birmingham (MD-80, daily).

December 2004: Milan (MXP) - Reggio di Calabria.

January 2005: 2 MD-82's (49430; 49432), sold to Dubrovnik Airlines (DBV).

March 2005: Alitalia (ALI)'s investment bankers Goldman Sachs & Mediobanca finalized the underwriting syndicate for (ALI)'s EUR 1.2 Billion/$1.6 Billion capital increase. The stake of the Italian state in (ALI) is expected to fall from 62.4% at present, to below <50%.

April 2005: Alitalia (ALI) as the national carrier, operates to domestic and international destinations from bases at Rome, and Milan. Alitalia (ALI) is a founding member of the SkyTeam Alliance (STM).

20,653 employees (including 2,415 Flight Crew (FC), 4,359 Cabin Attendants (CA), & 35 Maintenance Technicians (MT)).

(IATA) Code: AZ - 055. (ICAO) Code: AZA (Callsign - ALITALIA).

Parent organization/shareholders: Ministry of Treasury (62.3%); other shareholders (including employees) (35.7%); & Air France (AFA) (2%).

Owns: Alitalia Express (100%).

Alliances: Sky Team (STM); Air Alps Aviation; Air Europa (ARE); Alitalia Express; China Airlines (CHI); City Airline; Croatia Airlines (CRH); Cyprus Airways (CYP); Japan Airlines International (JAL); Malev (HGA); Qatar Airways (QTA); SN Brussels (DAT); Tarom (TRM); & Varig (VAR).

Main Base: Rome Fiumicino Leonardo Da Vinci Airport (FCO).

Hub: Milan Malpensa airport (MXP).

Domestic, Scheduled Destinations: Ancona; Bari; Bologna; Brindisi; Cagliari; Catania; Florence; Genoa; Lamezia Terme; Milan; Naples; Palermo; Reggio Calabria; Rome; Trieste; Turin; Venice; & Verona.

International, Scheduled Destinations: Accra; Algiers; Amsterdam; Athens; Barcelona; Beirut; Birmingham; Boston; Brussels; Bucharest; Budapest; Buenos Aires; Cairo; Caracas; Casablanca; Chicago; Copenhagen; Dakar; Damascus; Delhi; Dubai; Dublin; Frankfurt; Istanbul; Lagos; Lisbon; London; Madrid; Malaga; Malta; Manchester; Miami; Moscow; Mumbai; New York; Nice; Osaka; Paris; Prague; Sao Paulo; Shanghai; Sofia; St Petersburg; Stockholm; Tehran; Tel Aviv; Thessaloniki; Tirana; Tokyo; Toronto; Tripoli; Tunis; Valencia; & Washington.

In June 2005, code share with Aeroflot, Milan Malpensa to Moscow.

The fleet consists of 183 airplanes with an average age of 9.9 years, including 154 short/medium-haul airplanes & 29 long-haul airplanes.

May 2005: 2004 = -EUR 810.4 Million/-$980.6 Million (-EUR 519.7 Million): due to -EUR 308.6 Million restructuring charges: -1.4% (RPK) traffic.

June 2005: Code share with Aeroflot Russian Airlines (ARO), Moscow Sheremetyevo - Milan Malpensa.

Selects Rockwell Collins data link communications equipment for its fleet of 767's, MD-11's, MD-82's, A319's, A320's, & A321's, including CMU-900 Communications Management Unit, the APM-900 Aircraft Personality Module & the VHF-920 Digital Link Transceiver, plus the Airaft Optional Communications Data Link software.

MD-82 (2107-53231) traded in to Boeing (TBC).

August 2005: 20,699 employees (+.2%).

September 2005: Airbus (EDS) said Alitalia (ALI) will install its Future Air Navigation System B on 23 A321s, joining Aeroflot (ARO) and Finnair (FIN) as customers for the data link navigation system.

October 2005: Alitalia (ALI) is preparing a revised business plan that will take into account higher fuel prices as well as the latest changes in its financial situation.

According to Il Sole 24 Ore, the carrier will post an operating loss of around -€200 million/$238.5 million for 2005, double its forecast. The newspaper added that Banca Intesa and Deutsche Bank, the two banks that are supposed to underwrite the planned €1.2 billion rights issue, requested the drawing up of an adjusted business plan. The institutions still have not given a definitive green light to the capital increase, yet time is pressing as the European Commission (EC) has set a year end deadline for the rights issue and Altialia's consequent privatization.

"The recapitalization is an intrinsic part of Alitalia's restructuring plan, which the (EC) cleared in June. If this recap does not occur by year end, we will reopen the dossier," Stefaan de Rynck, spokesperson for Transport Commissioner Jacques Barrot, confirmed.

In July 2004, as part of the (EC)'s approving a state-guaranteed €400 million bridging loan, Italian authorities gave an undertaking that the state's share in (ALI)'s capital would be less than <49% within no more than 12 months (a commitment that already has been broken). This undertaking was not a requirement by the (EC), De Rynck noted, yet it illustrates the delay in the restructuring process and (ALI)'s shift into a privatized carrier.

Unions were scheduled to meet with management to discuss new measures to counter higher-than-expected fuel prices. The (ALI) board will present the new industrial plan.

Separately, the Italian cabinet was expected to approve a decree providing assistance for Italian airlines to deal with, among other things, rising fuel prices. Deputy Transport Minister, Mario Tassone indicated the carriers would get about €120 million of state aid.

The Italian government, as expected, approved a financial assistance package for Italian airlines amounting to €200 million/$239 million. Deputy Transport Minister, Mario Tassone stressed that the aid package is directed to the Italian airline industry as a whole to "help them overcome moments of crisis owing to the rising fuel price," "La Republica" reported. It added that Alitalia (ALI) will receive approximately €80 million. Because Rome cannot give aid to the carrier directly without violating (EU) regulations on state aid, the decree is designed to provide benefits to all Italian airlines. The aid is welcome news to Alitalia (ALI), which aims to present a revised restructuring plan that will persuade Deutsche Bank and Banca Intesa to guarantee a €1.2 billion capital increase.

Alitalia (ALI) and its trade unions agreed to an additional €65 million/$78.2 million in annual cost savings over the next three years. The savings will be included in the updated Business Plan 2005 - 2008, which will be discussed by the airline's board today. The accord involves efficiency measures and productivity improvements for pilots (FC), flight attendants (CA) and ground staff (MT), but does not contain further job cuts or pay reductions.

The initial restructuring plan, which was endorsed by unions in September 2004, identified some -3,700 redundancies, the introduction of a new group structure (including the spinning off of the services activities) and a €1.2 billion recapitalization.

"The agreement contributes to the launch of a recapitalization, which is essential for strengthening the company and giving perspective to the employees," Alitalia (ALI) and the unions said in a joint statement following the signing of the agreement. According to (AFP), Chief Executive Giancarlo Cimoli had insisted that additional cost savings were necessary to help offset higher-than-expected fuel prices and avoid bankruptcy. Cimoli said the banks earmarked to underwrite the capital hike wanted an additional €550 million in savings.

At the end of August, the group's net debt was €1.712 billion, similar to the €1.710 billion at the close of July. Cash-to-hand and short-term financial credits on August 31 amounted to €300 million.

Italian air traffic controllers are set to walk off their jobs for 4 hours in a strike called to campaign for improved training and more staffing. (ALI) said it expected to cancel 62 domestic and 40 international flights.

MD-11F (48427, EI-UPE), operates for Alitalia (ALI) Cargo.

November 2005: Alitalia (ALI)'s external auditor, Deloitte & Touche, declined to approve the carrier's accounts for the first half of the financial year ended June 30 owing to a lack of sufficient detail about its planned €1.2 billion/$1.4 billion capital increase. The carrier has yet to provide evidence it has reached an agreement with underwriters, according to Deloitte, whose statement was published on (ALI)'s website.

In an interview with "La Stampa," Alitalia (ALI) Financial Director, Gabriele Spazzadeschi said he is confident the group will finalize the underwriting consortium for its recap in the coming days. He added that the agreement with underwriters will provide the necessary guarantees for approval of its first-half accounts.

In a separate statement in line with a requirement by Italian market regulator Consob, Alitalia (ALI) SpA said its net debt amounted to €1.71 billion at the end of September, slightly down from a month earlier. Available liquidity was €295 million against €300 million at the end of August.

(ALI) confirmed it has called a board meeting for tomorrow to determine the terms and conditions of its long-awaited capital increase. The board approved a rights issue worth up to €1.2 billion/ $1.42 billion although it did not specify whether it finally had secured firm backing from its lenders. Banca Intesa, Italy's largest bank in terms of assets, said late last week it would guarantee €100 million of the capital increase. Accountants Deloitte & Touche last week refused to endorse (ALI)'s results for the first half of 2005, citing uncertainty over its recapitalization plan.

(ALI) reported an unaudited net profit of +€5 million under International Financial Reporting Standards for the third quarter ended Sept 30, up from a net loss of -€46 million in the year-ago period. Quarterly revenue rose +10% to €1.23 billion. Operating result improved year-on-year by €68 million to an operating profit of +€44 million. Labor costs were reduced by -10%, or €30 million, to €264 million. Net debt on September 30 amounted to €1.67 billion, down -€53 million compared to June 30.

Passenger traffic increased +4% (RPK) on a +5.8% (ASK) growth in capacity during the quarter. For the nine months, passenger traffic rose +11.3% (RPK) on the prior-year period on a +13% (ASK) hike in capacity.

Separately, (ALI) is adding several new destinations as part of its winter timetable. It is starting service to five additional cities in Italy: - - Bolzano, Parma, Rimini, Treviso and Alghero - - in partnership with Air Alps and Alpi Eagles (ELG). In Europe, it is adding Strasbourg and Kiev while continuing its expansion strategy to Eastern Europe with additional frequencies to Bucharest, Moscow, Prague, Sarajevo, Skopje and Sofia. It did not provide details on frequencies or launch dates. It also is adding a daily flight from Milan Linate to London Heathrow.

On its long-haul network, (ALI) is increasing frequencies to Dakar, Delhi and New York, while the year-old Milan - Shanghai route will be upgraded to daily service.

(ALI)'s long-awaited rights issue aimed at financing its restructuring plan and saving it from bankruptcy will be launched today and run in stages through December 2.

The share issue is expected to raise €1.01 billion/$1.18 billion, around -17% below the carrier's original goal of €1.2 billion. The Italian state will subscribe to just under half the shares issued, worth €489.2 million, diluting its stake to below 50% from the current 62.3%.

A consortium of banks led by Deutsche Bank will underwrite the remaining share of the capital increase, or €516.9 million, the airline said in a statement. According to Il Sole 24 Ore, Deutsche Bank engaged itself to subscribe up to €200 million with Banca Intesa taking up €100 million and Societe Generale €25 million.

(ALI) noted that its auditor, Deloitte & Touche, agreed to certify its results for the six months ended June 30, following the rights issue agreement. It also said state holding company Fintecna agreed to a capital increase of €92 million in ground services unit Alitalia Servizi, equaling a 49% stake in the company. Under the deal, (ALI) handed over the "use" of 2% of Alitalia Servizi's capital without relinquishing the control that would go with the 51% stake.

The size of the rights issue exceeds (ALI)'s current market capitalization of roughly €800 million. The group posted a small net profit of €5.5 million in the third quarter. It closed fiscal year (FY) 2004 with a loss of more than -€800 million. Its net debt amounts to about €1.7 billion.

(ALI)'s unions warned they will stage multiple strikes totaling 72 hours beginning Nov 29 with a 24-hour walkout by pilots (FC) and flight attendants (CA). The financially troubled carrier on Monday launched its rights issue in an attempt to raise about €1 billion to finance its 2005 - 2008 restructuring plan and avoid insolvency. Unions claim it is not doing enough. "It's not just today that the industrial strategy is lacking," six unions said in a joint statement published in Italian media. "The recapitalization is necessary but not enough to offer a future to the 20,000 workers in Alitalia Group."

Volare Airlines (VLR)'s proposed sale has attracted offers from about 10 groups, including (ALI), AirOne (ADH), Meridiana (ALS), Eurofly (EUY), and easyJet (EZY), La Stampa reported. Deadline for submission of takeover bids for the Italian carrier was Sunday at noon. (ALI) Chairman & CEO, Giancarlo Cimoli said last week that his carrier might buy Volare (VLR) "if the price is fair." The (LCC), which offers domestic and European low-fare flights under the volareweb.com brand, collapsed last year along with Air Europe (EIY), its carrier for intercontinental scheduled and charter flights. The companies were admitted to the so-called Extraordinary Management Procedure on Nov 30, 2004, and have been restructured by a government-appointed Extraordinary Commissioner.

December 2005: Alitalia (ALI) secured an eight-year, $445 million loan from (GE) Corporate Banking (GECB) last week, bringing the beleaguered carrier one step closer to stability following the €1 billion/$1.2 billion rights issue that concluded earlier this month. The deal with (GECB) will be guaranteed by mortgages on 28 Alitalia airplanes, according to media reports.

Separately, (ALI) was fined €30,000/$35,600 by Italy's antitrust agency for displaying "misleading" advertising on the carrier's website. The ad pitched a roundtrip flight but showed a one-way fare, according to "Reuters."

(ALI) will inaugurate nonstop service from Milan Malpensa to Minsk on May 1st and will operate 3 flights a week, on Mondays/Wednesdays/Fridays, with an A320.

January 2006: Air France (AFA) - (KLM) Group denied reports it is increasing its stake in Alitalia (ALI). Earlier this week, Finanza e Mercati indicated (AFA) - (KLM) might take over the struggling Italian carrier. "We are currently not holding merger talks and we are not increasing our holding in (ALI)," Air France (AFA) spokesperson Samuel Coulon said. "We start to get used to the reports in the Italian press." He added that the French-Dutch group's position has not changed: "We have always said Alitalia (ALI) has to be privatized and be profitable before we initiate talks to join our group."

During the presentation of the group's first-half results in November, Chairman Jean-Cyril Spinetta confirmed that the company will participate in the €1 billion/$1.19 billion (ALI) recapitalization in order to keep its stake at 2%. (ALI) holds a 2% stake in (AFA).

"Air France (AFA) and (ALI)'s equity swap of 2% reflects the importance of the partnership developed between the two airlines," Spinetta stressed, noting the stake now is valued at €37 million compared to an approximate investment of €20 million. (AFA) and (ALI) have a joint venture between France and Italy, while (KLM) and (ALI) have a code share agreement.

Separately, Italian market regulator Consob confirmed that two investment funds and Norway's central bank have purchased substantial stakes in (ALI), "Reuters" reported. London-based investment management company Walter Capital Management acquired 8.19%, making it the second-largest shareholder after the Italian Treasury. Newton Investment Management bought a 4.22% stake and Norges Bank currently owns 2.04%. The Italian state lowered its majority stake to 49.89% during the recap operation.

(ALI) won the bidding for Volareweb.com (VLR), the Low-Cost Carrier (LCC) subsidiary of Volare Airlines (VLR). It reportedly offered €38 million/$46.2 million, some €10 million more than Air One (ADH), for the carrier, which has been in extraordinary administration since November 30, 2004, "Il Sole 24 Ore" reported. Air One (ADH) is considering suing (ALI), questioning its right to participate in the auction, Corriere della Sera said. Official results of the sale are due to be announced January 15.

(ALI) cancelled 74 flights (48 international, 26 domestic) due to a one-day cabin staff strike, "Reuters" reported. The dispute reportedly centers on (ALI)'s plans to acquire Volare (VLR).

A fifth day of wildcat strikes and other unrest at (ALI) resulted in more flight cancellations and left some Italian government officials giving up hope for the beleaguered carrier. "If it continues like this, bankruptcy is inevitable," Labor Minister Robert Maroni told La Republica, adding, "a more streamlined company will grow" in its place. Another official called for (ALI) to be "immediately privatized," although Prime Minister, Silvio Berlusconi said in a radio interview that it is a matter of "national pride" for the government to maintain its 49.9% interest in (ALI).

Much of the talk concerned (CEO), Giancarlo Cimoli's efforts to revitalize the carrier, which include a restructuring and recapitalization and which reportedly have left workers protesting longer hours, their reassignment to (ALI)'s new units and lower job security. Other employees missed work in order to meet with their unions, some of which have scheduled meetings with government officials.

Last October, (ALI) reached a three-year, €65 million/$78.8 million cost savings deal with its trade unions.

(ALI) suffered a sixth day of strikes as unrest continued over its restructuring and the sale of the majority of ground services arm (ALI) Services to Fintecna. Union leaders met with government ministers yesterday afternoon and presented a document claiming Alitalia (ALI) is uncompetitive, does not possess a strategic industrial plan and is under poor management, according to La Stampa. The report added that the government's negotiator, Gianni Letta, would yield partly to union demands by proposing the appointment of a new manager to assist (ALI) Chairman, Giancarlo Cimoli. Letta also may review the (ALI) Services sale.

(ALI) began returning to normal operations following several days of strikes. (ALI) reported on its website that picket lines were lifted and all suspended Maintenance Repair & Overhaul (MRO) activities at Rome Fiumicino had restarted. "In the coming hours, flight operations over the whole (ALI) network will gradually return to normal, despite the occasional slight inconvenience during the course of the day," the airline said.

Three weeks after the USA Department of Transportation (DOT) tentatively rejected their request for transatlantic antitrust immunity, SkyTeam members Delta Air Lines (DAL), Northwest Airlines (NWA), (KLM) Royal Dutch Airlines, Air France (AFA), Alitalia (ALI) and Czech Airlines (CSA) withdrew their application. In a joint filing to the (DOT), the airlines said they believe "the department reached the wrong decision for the wrong reasons," but added that "in light of the fact that [DOT] remains open to a grant of antitrust immunity . . . in the future, [they] have decided at this time to withdraw their request." At the same time, they asked the department to finalize its tentative approval of blanket code sharing authority among the six carriers.

February 2006: Alitalia (ALI) reported a net loss of -€167.6 million/-$198.7 million in 2005, a dramatic +80.5% improvement over the -€858 million it lost in 2004. Revenues increased +11.6% to €4.8 billion and passenger numbers rose +7.8% to 23.9 million. Labor costs fell -31% to €982 million as the number of employees as of Dec 31 dropped -45.7% from the prior year to 11,174, according to press reports. (ALI)'s management, unions and the Italian government are continuing to meet this week regarding the carrier's restructuring. The airline said that it could be profitable in 2006 but that it has not yet fully evaluated the effect of January's wildcat strikes.

Air One (ADH) won its appeal to block Alitalia (ALI)'s takeover of Volare Airlines (VLR), La Stampa reported. A Roman civil court argued it would be improper for (ALI) to spend part of a €400 million/$483.7 million state-guaranteed bridge loan to buy the bankrupt Low-Cost Carrier (LCC) rather than to address its own financial difficulties. (ALI) bid €38 million for Volare (VLR). Air One (ADH) said it was satisfied with the ruling, whereas Alitalia (ALI) described the court's decision as "abnormal," claiming it did not respond directly to Air One (ADH)'s appeal. Meantime, Meridiana (ALS) called for the sale process to be abandoned and restarted.

India and Italy signed an expanded air services agreement in New Delhi adding frequencies, destinations and fifth freedom rights on specified city-pairs.

Milan Orio al Serio airport served 323,229 passengers in January, an increase of +21% over the year-ago month. Scheduled passenger traffic rose +28% to 273,000 while the number of charter passengers rose +3%.

March 2006: Alitalia (ALI) (AZ/Rome Fiumicino) will end its code share agreements with Bulgaria Air (LZB) (FB/Sofia) and Croatia Airlines (CRH) (OU/Zagreb) by the end of March.

The European Commission (EC) authorized a €25 million/$29.9 million, six-month guarantee from the Italian government to ailing Volare Airlines (VLR). "This short-term aid is intended to rescue the firm from bankruptcy and allow it to take steps to continue operating," the (EC) said, noting that Volare (VLR) will be able to use the guarantee to obtain credit for that amount from banks. The airline, part of Volare (VLR) Group, went into extraordinary administration on Nov 30, 2004, and recommenced flights June 2005 from Milan Linate to Naples, Brindisi, Bari, Catania and Palermo. Its extraordinary administrator launched a sale process that has become the subject of a series of legal cases. The Low-Cost Carrier (LCC) initially was awarded to (ALI) following a bidding process, but Air One (ADH) contested the legality of (ALI)'s participation, arguing it was using restructuring aid to finance the acquisition. An initial decision favored (ALI), and earlier this week, a court in Milan backed a decision made by a court in Busto Arsizio to reject Air One (ADH)'s appeal, according to La Stampa. Another ruling is expected from Rome's main court in the coming days.

Later, the Italian government said that it conditionally approved (ALI)'s €38 million/$45.9 million takeover of struggling Volare Airlines (VLR), according to press reports. (ALI)'s bid had been challenged in court by domestic competitor Air One (ADH), which will continue to press its claims. The acquisition depends on (ALI)'s keeping Volare (VLR)'s operations going for at least two years while maintaining year-end 2005 employment levels. If it fails to abide by these conditions or if Italy's antitrust authority opposes the deal, then Air One (ADH) will be adjudged the winner of the bid, the Industry Ministry said in a statement. A partnership between Italian Low-Cost Carrier (LCC) Meridiana (ALS) and former (ALI) subsidiary Eurofly (EUY) will take Volare (VLR) if Air One (ADH) is unable to proceed. The ministry is overseeing the so-called extraordinary administration of Volare (VLR), which received permission earlier this month to take a €25 million, six-month loan from the government. (ALI) won its appeal in a Rome court against a previous ruling in favor of Air One (ADH).

April 2006: Continental Airlines (CAL) and Alitalia (ALI) launched a code share agreement, effective immediately, that will see (CAL) put its code on select (ALI) flights from Rome Fiumicino and Milan, and have (ALI) place its code on (CAL) flights from Newark to 11 USA cities.

Jat Airways (JAT) and (ALI) begin code sharing between Belgrade and Milan with three daily flights from April 24 using Alitalia Express Embraer 170s.

Sabre Airline Solutions signed deals worth $2.5 million with Alitalia (ALI) to provide it with revenue integrity products, as well as its consulting team, to stem what Sabre said is "millions of dollars of revenue leakage each year." The carrier also extended and upgraded its use of the Sabre AirMax revenue management system.

Alitalia (ALI) Cargo launched Milan Malpensa - Atlanta service on March 29.

May 2006: Alitalia (ALI) is planning to expand the number of routes it operates from Rome. The airline wants to introdce 25 new medium and long haul routes from Leonardo da Vinci Airport starting from March 2007.

(ALI)'s acquisition of the assets of bankrupt Volare (VLR) Group was suspended yesterday by Italy's top administrative court, AFX reported. The state council supported an appeal by Air One (ADH), which argued that the flag carrier should not have been allowed to bid for Volare (VLR) because of its precarious financial position and for antitrust reasons. Volare (VLR) Group, which includes charter carrier Air Europe (EIY) and Low Cost Carrier (LCC) Volareweb, was put up for sale in November by a government-appointed administrator. The state council also noted there were "violations" in the way the auction for Volare (VLR) was conducted.

(ALI) said its acquisition of Volare (VLR) remains valid, despite the state council's ruling, and it "is confident that these irregularities can be resolved soon, as they do not challenge the validity of (ALI)'s offer or the administrator's decision that it was the highest." (ALI) bid €38 million/$48.8 million for the group, bettering Air One (ADH)'s offer by €10 million. (ALI)'s acquisition of Volare (VLR) is also subject to approval by Italy's antitrust authority, which has until May 28 to either clear the deal, or decide on a more detailed examination.

Trade union (SULT), which represents about one-third of (ALI)'s flight attendants (CA), called a 24-hour strike for June 17.

Although the Italian government reduced its stake in (ALI) below 50% in its recent recapitalization, new Transport Minister, Alessandro Bianchi felt justified in calling for a change in management at the struggling flag carrier, which reported a widened -€156.6 million/-$200 million first-quarter loss, that it attributed largely to the impact of protests by (ALI) Servizi workers. (ALI) said bad weather and the January strikes knocked -€80 million off operating revenues and -€40 million off the operating result.

Bianchi is part of the new center-left government of former European Commission (EC) President, Romano Prodi elected last month. "I am not fond of the formula 'change the government, change the management.' But it is clear that even this needs to be discussed, because if there are things that are not working, the management should have the answers," Bianchi told the (ANSA) news agency. "We know only that the accounts of this company have worsened lately and we should understand why." He added that the position of (ALI) President & (CEO), Giancarlo Cimoli was "necessarily one of the subjects under discussion."

(ALI)'s main trade unions sent a letter to the new parliament and government noting that full-year and first-quarter results show that the carrier's "health conditions remain very harsh," (AFX) reported. Unions reportedly also sent a letter to management warning of possible new strike actions. The unrest is related to (ALI)'s failure to apply the same contract conditions to employees of the Servizi unit.

June 2006: Alitalia (ALI) corrected a report in "Il Corriere della Sera" claiming (ALI) suffered a -€102 million/-$131.2 million revenue shortfall in the first four months compared to its forecast. "To be underlined is that revenues estimates mentioned in the article are not total revenues estimates but just estimates related to the passenger business (cargo and other revenues are not included) and therefore they do not provide a complete picture," the carrier noted in a statement. It added that "on the negative difference on budgeted January to April revenues, it's important to remember that (ALI) scored in the first quarter 2006 a decrease of passenger revenues of approximately -€80 million vs company expectations due to January strikes and bad weather."

Nine SkyTeam (STM) member carriers signed a Memo of Understanding (MOU) with the British Airports Authority (BAA) confirming their co-location at London Heathrow (LHR)'s Terminal 4 in 2008, when the new T5 opens and the airport reorganizes. The alliance said nearly 3.5 million passengers travel through (LHR) each year aboard Aeroflot (ARO), Air France (AFA)-(KLM), Alitalia (ALI), (CSA) Czech Airlines, and Korean Air (KAL). (KLM) already operates out of T4. AeroMexico (AMX), Delta Air Lines (DAL), and Northwest Airlines (NWA) are parties to the agreement and will have the option to take a place in T4 should they serve Heathrow (LHR) in the future.

The alliance (STM) will upgrade the terminal to include 32 check-in desks, additional luggage drop-off locations, lounges and space for self-serve kiosks.

Alitalia (ALI) and Meridiana (ALS) signed a code share agreement for the Rome - Cagliari route. (ALI) will add its code to Meridiana's flights, while (ALS) will lease an (ALI) airplane to operate on the route. (ALI) lost the right to fly to Cagliari and Olbia in April, because it applied for renewal after a deadline set by (ENAC). The three-year concession was awarded to Air One (ADH) and Meridiana (ALS).

Began upgrading its MD-82 fleet by introducing larger overhead luggage lockers. The new compartments offer around +20% more space.

July 2006: Alitalia (ALI) said its net debt as of June 30 was €896 million/$1.13 billion compared to €914 million on May 31.

August 2006: Continental Airlines (CAL) and Alitalia (ALI) expanded their code share agreement to include (CAL) flights from Newark to three Canadian destinations and Mexico City.

September 2006: Air France (AFA) - (KLM) Group once again denied mounting rumors of a pending tie-up with financially struggling Alitalia (ALI). "There are clear conditions set for a merger with Alitalia (ALI), and they are not fulfilled," (AFA) - (KLM) Deputy CEO, Pierre-Henri Gourgeon told analysts during a teleconference. "Alitalia (ALI) should be privatized, and its recovery plan should demonstrate with real figures that recovery is on track."

Gourgeon also brushed aside recent reports in the French and Italian press of a secret deal between the French and Italian governments that would exchange French support for the merger with (ALI) for renunciation by Italy's Enel energy company of any intention to bid for France's (SUEZ). The French government holds 18% of (AFA) - (KLM). The group and Alitalia (ALI) hold small cross-shareholdings of about 3%.

(ALI), in which the Italian government still owns just under 50%, confirmed last week that it is reviewing and revising its business plan to counter rising fuel costs and adjust its targets.

Business Plan 2005 - 2008 forecasts that (ALI), the airline entitity, will achieve a breakeven result this year and an (EBITDAR) margin of about 14% for 2007 and 2008.

However, (ALI) warned in May, while reporting a widening of its first-quarter operating loss to -€129 million and a -3.1% decline in revenues, that it would be "opportune to wait for the end of the second quarter as well as hope for an improvement in trade union relations" before making a full-year forecast. It is expected to report first-half results on September 12.

Meanwhile, unions have announced a 24-hour strike for September 7, blaming management for (ALI)'s poor financial performance despite staff reductions and productivity increases. Later, (ALI) said it was forced to cancel 105 domestic and 74 international flights because of a 24-hour strike called by four trade unions.

Later, (ALI) said a 4-hour strike by 6% of flight personnel and 20% of ground workers forced the cancellation of 67 flights. Workers are protesting a management business plan proposal that one union leader claimed "heavily penalized" labor, dismissing further talks with management as "useless, hollow," according to Italian media reports. The carrier was forced to cancel 105 domestic and 74 international flights on September 7 because of a 24-hour strike called by four trade unions.

The company stated that group net debt rose to -€909 million/-$1.17 billion in July from -€896 million in June, as cash reserves fell to €862 million from €879 million.

(ALI) initiated an appeal with a regional administrative court against the conditions imposed by the Italian competition regulator on its acquisition of Volare (VLR), La Stampa reported. In July, (ALI) received conditional approval for its €38 million/$48.1 million bid to acquire Volare (VLR). The conditions included the surrender of four slots at Milan Linate - - two of Volare (VLR)'s domestic slots to Bari and Lamezia Terme and two pairs of slots for flights to Paris Orly.

T6he Alitalia (ALI) Group said that its full-year net result "should approach the level achieved in 2005," when it lost -€167.6 million/-$212.9 million. It had postponed making a full-year forecast following a difficult first quarter in which labor unrest and falling passenger revenues hit hard on its bottom line.

(ALI) will discontinue nonstop service from Milan Malpensa to Washington Dulles on September 30th. The airline currently operate 6 flights a week on the route, daily ex-Saturdays.

October 2006: The Alitalia (ALI) Group acknowledged that its airline unit will not break even this year as it predicted in its business plan, September 4 and admitted that survival will be difficult despite this year's state-guaranteed +€1.3 billion/+$1.7 billion recapitalization. "In the current context, the national carrier cannot generate a profit even from capital already invested," (ALI) noted in a report obtained by "Il Sole 24 Ore." The document precedes a meeting between the government and (ALI)'s unions scheduled for Tuesday and a parliamentary hearing with the carrier's Chairman & (CEO), Giancarlo Cimoli, the following day.

"There would be no room for the national network carrier to survive, no less to grow, given that a higher number of flight hours would generate greater losses," (ALI) stated, blaming the Civil Aviation Authority, excessive union power and Low Cost Carriers (LCC)s. It argued that Italy's airline sector needs more consolidation. It is keen to join Air France (AFA)/(KLM) but the group repeatedly has insisted (ALI) must be profitable before discussions can move forward. (ALI) reported a first-half net loss of -€221.5 million and is expected to post a full-year loss of at least -€300 million before one-off capital gains.

Italian Premier, Romano Prodi told union leaders that the situation at (ALI) is "completely out of control" and that the government will come up with a plan by January 31 to save the ailing flag carrier, likely through some sort of international alliance or merger, according to press reports.

Prodi's office reportedly confirmed the latter in a statement following the meeting, which was prompted by (ALI)'s admission last week that its new business plan and recent recapitalization will not return it to profitability.

"(ALI) must change profoundly. It's evident that the company's strategy is unsuccessful and it's necessary for the government to take up responsibility and set clear guidelines for the future," Vice Premier, Francesco Rutelli was quoted as saying by the Associated Press.

(ANSA) reported that Prodi wants the carrier to be the centerpiece of a national air transport strategy. The government holds 49% of the airline. "(ALI) has lost its share of the market both at home and abroad and this is a problem which involves the whole country," he said. "It is useless to talk about restructuring or recapitalization, when no national or international strategy exists . . . We must move quickly. We can only succeed if we work together. If we fail we will be relegated to the sidelines of the European air transport sector."

Press reports from Italy indicated that the unions generally were supportive of Prodi's involvement, although some prefer a more compressed timetable. The government is scheduled to meet with embattled (ALI) (CEO), Giancarlo Cimoli. (ALI) said in late September that the Alitalia (ALI) Group's net debt as of August 31 was €932 million /$1.17 billion, an increase of -€23 million from July 31.

Later, (ALI) acknowledged that there are some "major quantitative shifts" in certain key figures put forward in its budget, as it reported consolidated revenue of €3.1 billion/$3.91 billion for the January - August period, -€82 million below its target.

The group's consolidated profit for the period was "about +€3.1 million." Comparative results were not provided.

Fuel costs, totaling €678 million, were about +€25 million higher than originally expected and labor costs were +€40 million higher compared to the planned target for the first eight months of 2006, mainly due to "unsuccessful implementation of efficiency programs." The carrier said the negative difference in terms of consolidated revenues, was due to reduced capacity during the period, owing to strikes that occurred in January and a reduction in actual flight hours.

(ALI) also said its board had mandated Chairman & (CEO), Giancarlo Cimoli "to start immediately examining structural alliance options with another carrier aimed at generating industrial synergies and maximizing the company's profitability, and therefore to adjust the Industrial Plan accordingly." It stressed, however, that its current available liquidity and future cash flow generation "are enough to cover its financial needs over the next 12 months and thereafter."

November 2006: For the first nine months, Alitalia (ALI) reported a pre-tax loss of -€275.4 million versus a pre-tax loss of -€107.5 million in the year-ago period. Operating revenues fell to €3.49 billion from €3.57 billion and operating expenses rose to €3.66 billion from €3.61 billion. Consolidated operating loss increased by €134 million to -€173 million. As of September 30, financial debt was €1.79 billion and cash, short-term financial credits and other current assets amounted to €715 million.

Air France (AFA)/(KLM) Group improved its fiscal first-half profit to +€618 million/+$809 million, up +50.7% from +€410 million in the year-ago semester, results Chairman, Jean-Cyril Spinetta attributed to the "unique competitive position" of the merged airline company.

Meanwhile, both Air France (AFA)/(KLM) and Alitalia (ALI) acknowledged a possible merger, but insisted talks are still at a preliminary stage despite months of speculation. "Exploratory exchanges are underway," Alitalia (ALI) said in a statement. Spinetta said during a press conference last week that (AFA)/(KLM) is still in the process of assessing the troubled Italian carrier's finances and "whether the integration of Air France (AFA)/(KLM) and Alitalia (ALI) could generate synergies." If (AFA)/(KLM) finds "positive" answers to its questions regarding Alitalia (ALI), and the potential benefits of a merger, "it then may be possible to start discussions," he said.

(AFA)/(KLM) appears to hold a strong hand going into any talks as revenues for the fiscal first half ended September 30 grew +10.3% to €11.93 billion and operating profit soared +30.5% to +€979 million from +€750 million last year.

Net income for the three months ended September 30 was +€374 million, up +25.5% from +€298 million in the year-ago quarter, excluding a €419 million net capital gain in the year-ago period, generated by the sale of a stake in Amadeus. Revenues grew +8.8% to €6.13 billion, while operating expenses rose +8.9% to €5.56 billion, producing a three-month operating profit of +€568 million, up +7.8% over +€527 million in the year-ago quarter. Fuel costs in the quarter jumped +29% to €1.17 billion.

Fiscal second-quarter passenger yield lifted +4% to 8.63 euro cents as passenger (RASK) increased +4% to 7.26 euro cents and passenger (CASK) rose +3.1% to 6.40 euro cents. Cargo revenues for the three months improved +3.7% to €724 million.

"On the basis of robust traffic levels and forward bookings for the coming months, Air France (AFA)/(KLM) maintains its objective for the full year to generate a significant increase in operating income compared to 2005 - 2006 [operating income of +€936 million]," the company said.

SkyTeam (STM) carriers Aeromexico (AMX), Air France (AFA), Alitalia (ALI), and (KLM) have co-located their operations at Sao Paulo Guarulhos (GRU) Terminal 1, which the alliance said is the first co-location in its network where the participating airlines operate equally. A common-use ticket office and joint purchasing of ground handling services, also have been implemented. The alliance operates 75 weekly flights to and from (GRU).

December 2006: The Italian government confirmed its intention to reduce its controlling interest in Alitalia (ALI) in an effort to lift the carrier out of the red and into an alliance.

Since the initial part-privatization in December 2005, the Italian state holds 49.9%. It now wants to reduce this by -25% to 30%. "The strategic recovery of Alitalia (ALI) cannot be done without the entry in the company's capital of new industrial and financial partners," the office of Prime Minister, Romano Prodi said in a statement following a cabinet meeting. The government has yet to appoint advisers on the sale, but aims to complete it by January.

Later, Italy's government, as expected, moved to sell 30.1% of its 49.9% stake in troubled Alitalia (ALI), insisting that new investment is the only way to save the carrier. But the government said it would only consider potential buyers, who agree to make a full takeover bid and "maintain the national identity of the company and its logo and brand."

Alitalia (ALI) (CEO), Giancarlo Cimoli told a parliamentary committee that the airline's future depends on a partnership. "The only strategic direction for Alitalia (ALI) is to integrate itself in a big international group," he said. Talk has centered on Air France (AFA)/(KLM), which holds a 2% stake, but several government officials have voiced disapproval of such a link-up and expressed their preference for a merger with another group or carrier, mentioning Air China (BEJ), Lufthansa (DLH), Thai Airways (TII), and Emirates (EAD). (ALI) dismissed reports some weeks ago, that it was in talks with Thai (TII).

(AFA)/(KLM) (CEO), Jean-Cyril Spinetta said last month that "exploratory" talks were underway, but reiterated that Alitalia (ALI) must improve its finances before (AFA) would consider increasing its current stake. The Italian carrier wanted to be part of the initial Air France (AFA)/(KLM) merger in 2004, but was excluded because of its poor financial health and government ownership.

Alitalia (ALI) was hit by a 24-hour strike, that forced the cancellation of hundreds of flights, including many scheduled for Saturday, the airline said. Press reports said workers were protesting the carrier's pending privatization.

December 2006: Starting May 1st, Rome (FCO) - Istanbul, incresed to 2/day, using MD-80s.

January 2007: Alitalia (ALI) said it could not confirm or deny media reports that it would report a loss of -€400 million/-$518.1 million for 2006. It said that the reports appear "to be based on an extrapolation on an annual basis of the before-tax result for the first nine months of the year." (ALI) reported a net loss of -€167.6 million in 2005 and a pre-tax deficit of -€275.4 million through the first nine months of 2006.

The Alitalia (ALI) Group expects to post a consolidated operating loss of about -€380 million/-$490.7 million in 2006, on revenue of €4.33 billion, the company said in a statement, following a request from the country's securities regulator.

(ALI)'s operating loss up to November 30, was -€197 million, instead of the +€364 million profit it had projected.

To add to the bad news, the airline announced the cancellation of approximately 130 flights in and out of Milan Malpensa, Milan Linate and Rome Fiumicino ahead of a 4-hour air traffic controller strike.

In addition, Air France (AFA)/(KLM) announced - - the deadline for expressions of interest - - that it would not bid for the stake in (ALI) put up for sale by the Italian government, as the "required conditions [for a bid], are not met."

(ALI) said the discrepancy between its forecast and actual result, was owing to lower-than-anticipated revenue, because of labor issues, competition from Lowe Cost Carriers (LCC)s and fuel costs. It said it has sufficient liquidity to cover its financial needs "over the next 12 months and thereafter." Its net debt at the end of December was €1.03 billion.

According to Italian press reports, three groups of private investors were expected to submit expressions of interest to buy the airline: Italian private equity fund Management & Capitali, Texas Pacific Group, and privately held Italian carrier Air One supported by Banca Intesa. The government said buyers must have minimum capital of €100 million and must maintain AZ's 18,000 strong workforce, domestic network and Italian identity.

The Italian government's offer to cede control of Alitalia (ALI) has domestic media buzzing about potential suitors. Finanza Mercata said Air France (AFA)/(KLM), which always has been considered a potential buyer, will join with SkyTeam partners Korean Air (KAL), AeroMexico (AMX), and (CSA) Czech Airlines to bid for (ALI). Italian Transport Minister, Alessandro Bianchi reportedly told Radio 24 that he "would not be happy" if (AFA)/(KLM) took control of (ALI), but that he "would adapt to it." Italian businessman, Paolo Alazraki told Italian media he is heading a consortium of 16 investors prepared to buy (ALI) and return it to profitability within two years without cutting jobs. "The plan . . . excludes the sale of assets and land," he said. "It is based on one or two solid international alliances [not (AFA)/(KLM)] an on an agreement with trade unions."

Alitalia (ALI) is attracting the interest of Rothschild investment bank, which is forming a consortium of Italian and international investors to present a bid for the stake being sold by the Italian government, according to several press reports. The consortium will include privately held Italian carriers, Air One (ADH) and Meridiana (ALS), plus two USA private-equity funds. Italian bank Intesa Sanpaolo also is involved. Select SkyTeam (STM) airlines led by Air France (AFA)/(KLM) and Milanese businessman, Paolo Alazraki, reportedly are interested as well. The government, which holds 49.9% of (ALI), is marketing 30.1% of the struggling flag carrier and may sell the rest if the right offer is made. By law, a buyer of the 30.1% stake will be obliged to make an offer for all (ALI) shares. The government is accepting expressions of interest until January 29.

Eleven private investor groups submitted expressions of interest to buy Alitalia (ALI), the Italian Economy Ministry announced. Among the interested parties, not including Air France (AFA)/(KLM), are Carlo De Benedetti's private equity fund Management & Capitali, Texas Pacific Group, AP Holding (led by Air One (ADH) Chairman, Carlo Toto), private equity fund MatlinPatterson Global Advisers, Italian banking group UniCredit SpA and Italian investor Paolo Alazraki. In the coming days, the ministry and advisers from Merrill Lynch will examine the expressions of interest "for the purpose of admission to the next phase."

(AFA)/(KLM), which holds 2% in (ALI), said it "intends to continue to develop the partnership with Alitalia (ALI) within the SkyTeam alliance and in industrial and commercial cooperation begun between the two companies at the end of 2001." Europe's largest airline always has said (ALI) has to turn around financially before it would consider a tie-up, though insiders note (AFA)/(KLM) may participate in the sale in a later stage as any consortium can admit new partners before firming bids.

Kuwait Airways (KUW) and Alitalia (ALI) will code share on (KUW)'s 3x-weekly service to Rome Fiumicino, effective January 14th.

Air France (AFA)/(KLM) Chairman & (CEO), Jean-Cyril Spinetta resigned from the Alitalia (ALI) board, fueling speculation that the group might submit a bid for a controlling stake in Italy's struggling national carrier.

"Since the Italian government has launched a bid to acquire stakes in the capital of Alitalia (ALI) and as Air France (AFA)/(KLM) is a partner of Alitalia (ALI), the Air France (AFA)/(KLM) Chairman can no longer sit on the board of directors," (AFA)/(KLM) said in a brief statement.

The government launched the bidding process for at least 30.1% of (ALI) and set a January 29 deadline to submit expressions of interest. The sale, however, is attached to a set of conditions. The new owner must safeguard Alitalia (ALI)'s "national identity," most of its domestic network and employment levels.

(AFA)/(KLM) holds 2% of (ALI) and is considered the most likely candidate for a takeover, although it repeatedly has said the Italian carrier must turn around its finances. In November, Spinetta said that "at Alitalia (ALI)'s request" the group had begun "exploratory talks" on (ALI)'s business plan and potential synergies resulting from a merger.

Italian Prime Minister, Romano Prodi said that he would support "a clear and strong proposal" from (AFA)/(KLM). Yet he warned he would be less sympathetic toward a merger that would see (ALI) evolve into a feeder operation for long-haul traffic from Paris.

Spinetta's resignation, which came two days before the scheduled (ALI) board meeting, is the second this week (Gabriele Checchia left Monday) and lowers the number of board members to two. (ALI) statutes require at least three.

Meanwhile, trade unions representing some Alitalia (ALI) employees announced that they had suspended a strike called for Friday in protest against the airline's privatization.

February 2007: Alitalia (ALI) Chairman, Giancarlo Cimoli has been replaced by Banca di Roma Chairman, Berardino Libonati, the Italian Ministry of Economy & Finance announced. It did not say whether Cimoli, who was appointed in 2004, also would be replaced as (CEO). The decision comes ahead of (ALI)'s February 22 shareholders' meeting and coincides with the review of the 11 "expressions of interest" the government received from potential buyers of the troubled airline. Several other new board members were appointed. The previous board dissolved last month. The Italian Dept of the Treasury, which is overseeing (ALI)'s privatization, is expected to narrow the list of bidders shortly and finalize the sale in June.

The Italian government has reduced the list of 11 potential bidders for Alitalia (ALI) to five, according to press reports. Those five each must submit nonbinding offers in early April, "Reuters" reported. They are Air One (ADH) Chairman, Carlo Toto's AP Holding, Carlo De Benedetti's private equity fund Management & Capitali, MatlinPatterson Global Advisers, Texas Pacific Group, and UniCredit. The government is selling a 30.1% stake in the carrier, a holding that requires the owner to bid for the entire company under Italian law.

Later, Alitalia (ALI) shareholders officially removed Giancarlo Cimoli as Chairman & (CEO), and installed Banca di Roma, Chairman, Berardino Libonati, the "Associated Press" (AP) reported from Rome. A new board also was appointed. Meanwhile, Il Sole-24 Ore reported that the new board is considering writing down the value of (ALI)'s fleet by €400 million/$525.5 million, which would increase the company's 2006 net loss to approximately -€780 million. Board member, Carlo Sabatini told reporters the board still is evaluating last year's figures and has not come to a decision, (AP) said.

(BCI) Aircraft Leasing of Chicago announced the sale and leaseback of two Alitalia (ALI) A321-100s. It was (BCI)'s first deal with (ALI).

March 2007: A year "marked by increasingly complex and serious problems" ended with a stunning -€405.2 million/-$541.7 million pre-tax loss for Alitalia (ALI), which nevertheless promised that it possesses sufficient cash to cover operational and financial costs "for a period well in excess of 12 months." The loss widened from a -€144.2 million pre-tax deficit in 2005. It would have been larger, had the board followed through on a plan to write down the value of the fleet by €400 million. It said it chose not to, "taking into consideration current events." The board also said it would "freeze the most significant extraordinary transactions for the time being" as the sale of the company goes forward. The five remaining bidders are expected to submit nonbinding offers next month. (ALI) blamed a +16% rise in fuel costs, its ability to cut operational costs by "only" -€8 million, a +40% increase in low-cost carriers' presence in Italy and €100 million in lost revenue owing to labor difficulties for its troubling performance. Full-year operating revenue dropped -1.6% to €4.72 billion against a +2.9% increase in costs to €4.99 billion. The company said spinning off Alitalia Servizi accounted for most of the revenue drop. Operating loss expanded to -€265.7 million from 2005's -€47.5 million.

(BCI) Aircraft Leasing said it acquired two A321-100s from Airbus (EDS) that are on long-term lease to Alitalia (ALI), bringing to five the number of A321-100s the Chicago-based lessor has placed with (ALI).

April 2007: Alitalia (ALI) has attracted the interest of SkyTeam (STM) partner Aeroflot (ARO), Italy's Ministry of Economy and Finance confirmed. The Russian carrier will team up with Italian bank UniCredit, which will control 5% of the bidding group, although UniCredit and Aeroflot (ARO) reportedly are open to another airline joining the consortium. The "Moscow Times" reported that (ARO)'s bid is worth up to €700 million/$934.5 million. Two other consortia still are showing interest in bidding for Italy's troubled flag carrier: AP Holding, which is the holding company of Air One (ADH) Chairman & Owner, Carlo Toto, and a group comprising Mediobanca, Italy's largest investment bank, and USA-based Texas Pacific Group (TPG) and MatlinPatterson Global Advisers.

Initially, (TPG) and MatlinPatterson submitted separate expressions of interest. Italian private equity fund Management & Capitali, the investment company of Italian financier Carlo De Benedetti, withdrew Friday. The government set an earlier deadline for new partners to join the shortlisted group qualified to bid for the loss-making carrier. The ministry must approve the addition of Mediobanca and Aeroflot (ARO), employing the same criteria it used to select the shortlist of five bidders from the 11 expressions of interest it received initially. Demands include, among others, that the buyer commit to retaining Alitalia (ALI)'s identity for at least eight years. The government set an April 16 deadline to submit nonbinding offers and a business plan. It seeks to reduce its 49.9% stake in the airline to around 10% and aims to complete the privatization process by the end of June.

May 2007: Alitalia (ALI) reported a pre-tax loss of -€147.5 million/-$199.9 million in the first quarter, down slightly from a -€156.6 million deficit in the year-ago period. Operating revenues, including income generated through Volare Airlines (VLR), rose +7.4% to €1.06 billion, with passenger revenue up +8% to €824.8 million. Operating expenses increased +5.3% to €1.11 billion and operating loss declined to -€107 million from -€129 million. (RPK)s grew +5.6% against a +2.7% increase in (ASK)s. Load factor was 69.9% LF, a gain of +1.9 points, while passenger numbers lifted +5.9% year-on-year to 5.5 million. Yield dipped -0.4%, while (RASK) improved +2.4%. (ALI) did not provide exact yield and unit revenue numbers. It said it expects to report an "improved operating result" in 2007, and stressed it has sufficient cash in hand to cover operational and financial needs for a period in excess of >12 months. Final bids for the airline are due at the end of June.

Alitalia (ALI) Group's net debt as of March 31 was €1.07 billion/$1.46 billion, down -2.7% from February 28. During March, the company repaid €14 million of medium/long-term financing.

The Alitalia (ALI) board decided to move forward with a €197 million/$264.9 million writedown of the value of the carrier's fleet, a step it declined to take in March, when releasing its full-year financial results, but that became necessary, when it decided it had to "draw up a new and reliable business plan" ahead of the Italian government's sale of its (ALI) stake. The decision deepened the company's full-year loss to -€625.6 million from the -€405.2 million announced two months ago and the -€167.8 million suffered in 2005.

The accounting change affected (ALI)'s operating result as well, which plunged to a -€465.4 million loss from -€47.5 million in 2005. It reported a -€265.7 million operating deficit in March, when it said it would not write down the fleet "taking into consideration current events." It said the fair value of 50 airplanes after deduction of sales cost, was lower than the accounting value. The result of aligning the value of those airplanes with their recoverable value was €197 million.

The board said the 2006 loss, combined with the -€147.5 million pre-tax loss reported for the first quarter of 2007, "exceeds a third of the company capital," leading it to convene shareholders on June 26 "to take decisions regarding the 2006 balance sheet" and "modify some parts of the company statute." Despite the grim financial results, the government is proceeding with the planned privatization, granting the three bidders access to (ALI)'s restricted data. Final offers are due July 2. Meanwhile, Transport Minister Alessandro Bianchi played down reports that the government is looking to offload its entire 49.9% stake, telling Thomson Financial that it must keep 10% until at least 2010, in order to enusre that the conditions for full privatization are met.

Italy's Treasury Dept cleared all three bidders for Alitalia (ALI) to remain in the running. They will have access to Alitalia (ALI)'s financial books on May 24 and be able to submit binding bids at the end of June for the troubled airline. Remaining bidders are a consortium led by Texas Pacific Group and MatlinPatterson, a partnership between Air One (ADH) parent AP Holding and Intesa Sanpaolo, and a recently formed tie-up between Aeroflot (ARO) and UniCredit.

Later, (TPG), the USA private equity firm, formerly known as Texas Pacific Group (TPG), dropped out of the bidding for Alitalia (ALI), Italian Prime Minister Romano Prodi confirmed, according to widespread press reports from Rome. (TPG) apparently will concentrate on its pursuit of Iberia (IBE), leaving consortia headed by Aeroflot (ARO) and Air One (ADH) to compete for the government's 49.9% stake in (ALI). It is selling at least 39.9% of the airline. (TPG) reportedly issued a statement in Italy saying it is "not in a position to comply with all the requirements."

Alitalia (ALI) canceled about half its flights owing to two separate 8-hour strikes called by trade unions representing Italian air traffic controllers (ATC)s and (ALI) flight attendants (CA). In a statement, the carrier said the 394 cancellations will involve national and international flights in almost equal proportion.

(ALI) adopted Amadeus's Fares and Pricing Engine and the Amadeus Ticket Changer. It will use the solutions on a standalone basis to process all fares and pricing requests.

June 2007: Aeroflot (ARO) denied Italian media reports that it plans to drop out of the bidding for Alitalia (ALI), while revealing that it is working with the (EU) on maintaining (ALI)'s European traffic rights, if its consortium beats out Air One (ADH) and wins the privatization tender. "There is no hesitation to leave the bidding. There is no question of dropping out," Lev Koshliakov, an (ARO) Deputy Director General, told Thomson Financial. He said Italian bank Unicredit, which only holds a 5% stake in the consortium, could be the "nominal" owner of the traffic rights, but he would not explain further. Koshliakov said Aeroflot (ARO) wants to invest to develop Alitalia (ALI), rather than just own it. "Alitalia (ALI) and Aeroflot (ARO) are network companies, not like Air One (ADH) that is point-to-point. A combination of the networks would give synergies," he insisted. He said Aeroflot (ARO) is "confident" it will have the resources to renew (ALI)'s aging fleet, after receiving proposals from several international banks, noting that (ARO) has ordered 50 Sukhoi SuperJet 100s. Italy's Alenia Aeronautica holds 25% of Sukhoi Civil Aircraft. "This can be an interesting option and can be lucrative in terms of economics. Aeroflot (ARO) has special conditions as a launch customer," he said.

Meanwhile, (RIA) Novosti shed more light on Aeroflot (ARO)'s interest in Jat Airways (JAT). (ARO) signed a Memo of Understanding (MOU) with the Serbian carrier to acquire up to 75% of the airline and commit $100 million toward the purchase of short-haul and/or regional airplanes.

The Italian government appointed Credit Suisse to carry out an independent evaluation of the privatization bids for Alitalia (ALI). The government put its 49.9% stake up for sale in December and short-listed three bidders: Air One (ADH) owner AP Holding, the Aeroflot (ARO)/Unicredito Italiano combination, and a consortium led by Texas Pacific Group (TPG). The latter pulled out last month. The deadline for binding offers is July 2.

Later, the Italian government extended the bid deadline for its stake in Alitalia (ALI) to July 12 from July 2, following this week's decision to allow USA equity firm MatlinPatterson back into the auction. Meanwhile, Air One (ADH) partner, Intesa Sanpaolo said it was open to accepting new partners into the consortium, Reuters reported. It was unclear whether MatlinPatterson was in line to join the Air One (ADH) group or would bid independently.

Later again, three weeks after insisting it would see the process through to the end, Aeroflot (ARO) announced it would withdraw from the bidding for the Italian government's stake in Alitalia (ALI). "Aeroflot (ARO) and its advisers have not had access to critical information with respect to the commercial and operational aspects of Alitalia (ALI)'s business to confidently formulate a well supported business proposal to successfully restructure Alitalia (ALI)," the Russian carrier said in a statement. It said the "conditions for the sale" would have limited its restructuring plans for (ALI), and that despite its withdrawal, it remains committed to expanding activities in Europe "by increasing its operational activities as well as acquiring strategic assets."

Two potential buyers now remain: A consortium led by USA investment group MatlinPatterson, and AP Holding, the Italian holding company run by Air One (ADH) owner, Carlo Toto. Deadline for binding bids is July 12.

The (EC) denied a Ryanair (RYR)/Aer Lingus (ARL) merger on the grounds that two major carriers based in the same country and airport, presented an anticompetitive situation. Competition Commissioner, Neelie Kroes did not answer a question at a Brussels news conference concerning a similar problem with Air One (ADH) and (ALI), each of which operates bases at Rome Fiumicino and Milan Malpensa.

SkyTeam (STM) members Air France (AFA), Alitalia (ALI), (CSA) Czech Airlines, Delta Air Lines (DAL), (KLM) and Northwest Airlines (NWA) filed an application with the USA Department of Transportation seeking antitrust immunity on transatlantic routings. The carriers withdrew their previous application in January 2006 after the Dept of Transportation (DOT) issued a tentative decision denying the request. Delta (DAL) currently has antitrust immunity with Air France (AFA), (ALI) and (CSA), while Northwest (NWA) has antitrust immunity with (KLM).

"Included in the application is a joint venture agreement between Air France (AFA), Delta (DAL), (KLM) and Northwest (NWA), that would create a comprehensive and integrated partnership among the four SkyTeam (STM) members across the Atlantic," Northwest (NWA) said in a statement. "A more integrated SkyTeam (STM) alliance offers significant advantages to consumers, including more choice in flight schedules, travel times, services and fares." The carriers are attempting to take advantage of route opportunities made possible in the (EU) - USA "open skies" accord that goes into effect next year.

July 2007: The Italian government again pushed back the deadline for submitting binding bids for its stake in Alitalia (ALI), this time to July 23, Reuters reported. The deadline had been set for July 12.

Air One (ADH) parent AP Holding later withdrew from the bidding for Alitalia (ALI), leaving the Italian government scrambling ahead of the July 23 deadline for final offers. According to an AP Holding release cited by widespread press reports in Italy, the company said it determined that turning around the flag carrier would "require different acquisition conditions that would make possible Alitalia (ALI)'s sustainable and competitive growth." It did not elaborate, and the government did not release a statement last night. Following two extensions, the auction for the government's 49.9% stake in (ALI) was left in tatters. Aeroflot (ARO) pulled out last month, saying it lacked "access to critical information with respect to the commercial and operational aspects of Alitalia (ALI)'s business." The week before, the government had invited MatlinPatterson (MP) Global Advisors back to the auction. That group withdrew in May, when potential partner Texas Pacific Group (TPG) chose not to bid. Whether or not MatlinPatterson, or anyone else, plans to bid formally for Alitalia (ALI) was unclear. Transport Minister, Alessandro Bianchi said (MP) "don't seem to give big signs of life," according to Reuters. (ALI) reportedly is losing approximately -€2 million/-$2.8 million per day.

"Thomson Financial" reported that Air One (ADH) is targeting a 10% to 15% year-over-year rise in sales from €612 million in 2006 and expects full-year profit to increase from last year's €7 million. (ALI) reported a net loss of -€625.6 million last year.

August 2007: Alitalia (ALI) named former Finmeccanica executive Maurizio Prato chairman a day after Berardino Libonati resigned on the eve of a critical board meeting. (ALI) said it would "defer approval of the guidelines of the company industrial plan until a meeting scheduled for August 30, which would give Prato "time to obtain the necessary information." The board is scheduled to approve (ALI)'s first-half results on September 12. The company's net debt as of June 30 was €1.03 billion/$1.42 billion, down from €1.05 million at the end of May.

The Italian government will not be able to sell its stake in Alitalia (ALI) through private negotiations, Economy Minister, Tomasso Padoa-Schioppa said in Cortina D'Ampezzo, according to widespread press reports from Italy. He argued that the courts would investigate why the government negotiated with one suitor rather than another, making the transaction impossible to complete. The government has not revealed its course of action following its failure to sell off its 49.9% stake. Padoa-Schioppa said two weeks ago that liquidation remained a possibility, but that the government still hoped to conclude a sale.

A consortium consisting mainly of Italian financial groups and entrepreneurs, has emerged as a possible bidder for Alitalia (ALI), Reuters reported. The new group has more than five Italian and foreign members, representing both financial and corporate interests, according to an attorney representing it, who declined to identify members. Apparently none participated in the recently failed auction set up by the government. The attorney said the consortium presented its interest to the Treasury but not to Alitalia (ALI). The government still wants to sell its 49.9% stake in the carrier, but has transferred responsibility for locating a buyer to (ALI) management. Meanwhile, Alitalia (ALI)'s newly appointed Chairman, Maurizio Prato indicated that Air France (AFA)/(KLM) is negotiating to increase its shareholding to 10% from 2%, "La Stampa" reported.

Alitalia (ALI)'s new Chairman, Maurizio Prato, is considering selling regional and charter subsidiary Alitalia (ALI) Express in a separate tender, Finanza e Mercati reported. Air Alps and ItAli (ACL) were named as potential buyers.

Later, Alitalia (ALI) announced that it received a "telephone communication" from "an unspecified group of entrepreneurs" interested in purchasing the government's 49.9% stake in the Italian carrier. (ALI) said the group requested a meeting in late August or early September, without elaborating, but said it issued the statement in response to a press release from attorney Antonio Baldassarre, who represents the consortium. Baldassarre is a former chairman of Italy's constitutional court, "Reuters" reported. He declined to name the group's constituents but said last month that both domestic and foreign interests were involved.

Alitalia (ALI) will end up in foreign hands, Unicredito Italiano CEO, Alessandro Profumo predicted in an interview with "Il Sole 24 Ore," in which he blamed Italian protectionism. "We've defended Alitalia (ALI) so well, that it will disappear as an Italian company since thanks to protection, more protection, and yet more protection, the company is no longer able to stand on its own feet," he said. Unicredito and Aeroflot (ARO) constituted one consortium, that dropped out of the Italian government's failed auction for its stake in the loss-making flag carrier.

September 2007: Alitalia (ALI) posted a consolidated net loss of -€211.1 million/-$292.7 million for the first half of 2007, slightly narrowed from a -€220.2 million loss in the year-ago period. The carrier's board outlined financial and performance targets for its "survival/transition" plan, that aims to keep (ALI) viable through 2010, as it continues to seek a sale to private investors.
Revenue rose +3.1% to €2.31 billion from €2.24 billion in the year-ago period. Operating costs grew +3% to €2.44 billion, as fuel costs fell -1.5% to €464 million, and personnel costs increased +14% to €439 million. Operating loss for the six months ended June 30 amounted to -€127.4 million, narrowed from a -€130.6 million operating loss in the first half of 2006. Net debt as of June 30, was €988 million, similar to its debt position a year earlier. Cash and cash equivalents, however, shrank year-on-year to €562 million from €893 million and from €706 million at year end 2006.

Alitalia (ALI) Group, excluding Volare (VLR) carried 11.9 million passengers in the half-year, up +2.1%. Load factor inched up +1.3 points to 73.3% LF. Yield fell -1.9%.

Alitalia (ALI) intends to scrap 150 to 170 of its 340 daily flights from Milan Malpensa (MPX), as part of a new business plan aimed at stopping the troubled carrier's financial bleeding, Italian media reported following management's meeting with union leaders. The airline confirmed that it is "no longer able to sustain the negative trend of accumulated and perspective losses." From both a competitive and an economic point of view, it is "no longer able to operate efficiently out of two hubs," (ALI) said, noting that management had drawn up a new "plan for survival/transition" aimed at achieving "conditions of sustainability and continuity for company activities in the short/medium term" while waiting for a definitive decision regarding its future ownership. Without specifying details or concrete numbers, (ALI) said its survival/transition strategy includes increasing activities at Rome Fiumicino, while repositioning Milan Malpensa (MPX) flights by focusing on specific business segments. Among other initiatives, it plans to develop long-haul charter services through Air Europe (EIY) as well as consolidating its cargo, crew base and maintenance facilities at Malpensa (MPX). It also said it will suspend flights with "strongly negative economic results and with no prospects for recovery in the short term" and cut airplanes from its fleet. It recognized the "need to inject new financial resources through a substantial increase of capital."

Alitalia (ALI)'s board outlined financial and performance targets for its "survival/transition" plan, that aims to keep the carrier viable through 2010, as it continues to seek a sale to private investors. At a meeting, following the collapse of its recent privatization push, the board reiterated its call for a "substantial injection of financial resources," presumably from the Italian government. The board's plan, set to guide operations from March 30, 2008, through 2010, aims to reduce overall revenue -2.7%, and lower costs by -8%. This will be achieved through a "repositioning of long-haul activities, and the development of low-cost activities," as well as "improved flight productivity," the board said. The airline plans to carry 28.7 million passengers in 2010, with numbers rising more than >3.8% per year. It expects to carry 25.5 million this year.
Overall capacity will rise +1.6% annually, according to the board's plan. Short-haul services will have flat growth over the period as measured in flight hours, while long-haul hours will grow +5%. Cargo capacity will rise by +4.5% annually.

The board said it has made "first contacts" with "potential investors" and is aiming to complete the carrier's sale "in the shortest possible time." (ALI) has retained Citigroup as an adviser to help find buyers.

Chairman, Maurizio Prato said that by "the end of the month, all those potentially interested will be contacted by the adviser." He said there have not been any "shows of interest" so far.

Later, Maurizio Prato testified before an Italian parliamentary committee that the troubled airline is in even worse shape than is generally acknowledged, a striking admission given the already wide acceptance of (ALI)'s financial difficulties. "Alitalia (ALI) is in a comatose state, it's on life support and I am very surprised by the almost general state of denial," Prato told lawmakers, according to multiple news reports. He said the carrier likely will post a full-year loss of about -€400 million/-$564 million and does not have the resources to make more than >€320 million in debt payments due over the next two years. "I've been surprised by the general refusal to accept the reality of how critical the situation is," Prato said. He was appointed last month and is charged with selling off the Italian government's 49.9% stake in (ALI). He said that an international buyer, preferably a major airline group, likely would be needed to save the carrier, calling the notion that (ALI) could remain afloat as an independent entity "absurd." He left open the "possibility" that an Italian investor could buy it and revive it, but said a merger with a major international airline probably would give it a better chance of long-term survival and profitability. "Just becoming a little bigger wouldn't be enough for Alitalia (ALI) to compete with the big players," he explained. Air France (AFA)/(KLM) has said it is open to considering a potential merger with (ALI), which posted a consolidated net loss of -€211.1 million for the first half of 2007.

October 2007: Alitalia (ALI)'s board met regarding potential sale of the carrier and released a shortlist of six potential buyers following consultation with Citigroup and industrial adviser Roland Berger. The list comprises Aeroflot (ARO), Air France (AFA)/(KLM), AP Holding (Air One (ADH)), Cordata Baldassarre, Lufthansa (DLH), and (TPG) (formerly Texas Pacific Group). The Italian government wants to sell most of its 49.9% in (ALI) and asked Chairman, Maurizio Prato, who was appointed in July, to identify potential buyers after its own selloff efforts failed. "The board has resolved to carry out discussions to assess the interest" of the six identified parties, (ALI) said, adding that it intends "to complete such discussions in the shortest possible timeframe." Corriere della Sera reported that (AFA)/(KLM) is seeking to acquire an initial 15% to 20% stake in the loss-making airline through a share swap and would consider a full integration only if (ALI)'s earnings improve over the next 2 to 3 years.

Meanwhile, the pilots (FC)'s union issued a statement saying it would support only bidders who have "the economic resources necessary to back a serious financial plan, an industrial plan for development and above all with managers who have proven their ability to manage a complex company" like (ALI), the Associated Press reported.

Aeroflot (ARO) will decide within two weeks whether to submit a second bid for Alitalia (ALI), according to press reports citing (ARO) Deputy General Director Finance & Planning, Mikhail Poluboyrarinov, who said the airline may raise up to €1 billion/$1.43 billion to finance the acquisition. (ARO) was named on a shortlist of potential bidders.

Alitalia (ALI), (TAP) Portugal, and Air France (AFA) are now facing labor issues. Work stoppages by the National Flight Assistance Co and Air Transport Regione Lombardier, forced the cancellation of nearly 300 (ALI) flights in Milan and Rome, plus Osaka - Milan Malpensa service. (TAP) said the Civil Aviation Pilots Union scheduled a 3-hour strike yesterday, a 24-hour stoppage on Thursday, and a 13-hour strike on Saturday, because of "national legislating, relating to pilot (FC) retirement ages and conditions," which the airline argued are the "exclusive responsibility of the government." Meanwhile, "Reuters" reported that several cabin crew unions are planning to strike Air France (AFA) from October 25 to October 29. Baggage handlers at Paris Charles de Gaulle reportedly staged a work action Monday morning that caused delays.

November 2007: Despite falling passenger traffic revenue and continuing labor unrest, Alitalia (ALI) managed to narrow its third-quarter deficit. Its pre-tax loss of -€57.6 million/-$84.3 million was an improvement over the -€66.4 million suffered in the year-ago period, while its operating loss narrowed to -€19.1 million from -€42 million in the third quarter of 2006. A -4.6% decline in passenger revenue was offset by rising cargo and nontraffic income, producing a +1% climb in consolidated turnover to €1.27 billion. (ALI)said "industrial unrest" during the period, resulted in a "potential" revenue loss of approximately -€32 million. Costs fell -0.2% to €1.21 billion, which helped boost the operating result.

Operating a fleet of 185 airplanes at the close of the quarter, (ALI) reported a +0.1% increase in passenger traffic (RPK)s and a +0.3% rise in capacity (ASK)s, resulting in a -0.2 point slip in load factor to 78.6% LF. Yield fell -5.3% year-over-year, owing to increasing Low Cost Carrier (LCC) competition, and unfavorable foreign exchange trends, and revenue per (ASK) declined -5.5%.

Nine-month pre-tax loss narrowed to -€255 million from -€274.8 million in the year-ago period, as operating less fell to €146.4 million from €172.6 million. (ALI) said its full-year operating results "should be practically in line" with the -€265.7 million deficit reported for 2006, prior to a readjustment necessitated by a writedown in the value of its fleet. It forecast a "moderate" increase in passengers and a "noticeable" fall in yield and said it will retain sufficient cash to continuing operating for more than 12 months.

The Alitalia (ALI) Group's net debt as of September 30, was Euro1.71 billion, an increase of +6% from the prior month. The company repaid Euro13 million worth of medium/long-term financing in September.

The Dutch Transport and Water Management Inspectorate levied a €30,000/$43,740 penalty on (TAP) Portugal, and a €15,000 fine on Pegasus Airlines (PGS) for repeated abuse of the legally set special noise regime, during the night and early morning period at Amsterdam Schiphol (AMS). Compliance with the relevant environmental standards at (AMS) has been tightened since July, following an agreement between Airport Coordination Netherlands, the Dutch slot coordinator, and the Inspectorate of the Ministry of Transport and Public Works. In September, the (IVW) imposed a €30,000 penalty on Fly Air (FLM), and €15,000 penalties on Alitalia (ALI), Delta Air Lines (DAL), Corendon Airlines (CDN), and Air Cairo (AOX). In July, Clickair (CLK) received administrative fines of €60,000 and €15,000, and Atlas Air (TLS) one penalty of €15,000.

Alitalia (ALI) announced organizational changes comprising elimination of the Business & Corporate Coordination (BCC) Dept, establishment of a new Passenger & Cargo Division to be headed by former (BCC) Head, Giancarlo Schisano, and the immediate departure of Marketing & Business Strategies Chief, Giancarlo Zeni, who is replaced by Andrea Stolfa. In addition, the Administration, Finance & Control Dept now will report directly to the President.

Alitalia (ALI) announced that Aeroflot (ARO) "has decided not to take part in the project regarding the privatization of Alitalia (ALI)." Late last month, (ARO) said it would make a decision shortly. Air One (ADH)/Intesa Sanpaolo, Lufthansa (DLH), and Air France (AFA)/(KLM) remain interested in (ALI), according to "Reuters," which reported that Chairman, Maurizio Prato would delay the board's meeting with adviser Citigroup by about a week to the end of this month.

Alitalia (ALI) revised the deadline for nonbinding offers to December 6 after receiving an update from its adviser, Citigroup, on potential industrial and financial investors, who may bid for a majority shareholding. Air One (ADH)/Intesa Sanpaolo, Lufthansa (DLH), and Air France (AFA)/(KLM) reportedly remain interested. "Adviser Citi stated that contacts and discussions with the subjects involved are still being pursued," the loss-making carrier said following a board meeting, adding that it will "immediately" announce the number of proposals received as well as the names of the candidates. (ALI) said it expected nonbinding proposals this week and that its board would launch exclusive negotiations in the first half of December.

Italian air traffic is expected to face major disruptions because of strikes called by the country's transport unions. Italian media dubbed it "Black Friday."

December 2007: The Alitalia (ALI) board is scheduled to meet to review offers for the 49.9% stake that the government wants to sell. The embattled carrier delayed the deadline for nonbinding offers by one week and committed to "immediately" announcing the number of proposals received and the identities of the bidders. Air One (ADH), Air France (AFA)/(KLM), and Lufthansa (DLH) often are named as candidates, though the latter two had not confirmed publicly their intent to submit an offer. Italian Prime Minister, Romano Prodi said that a bidder's proposed industrial plan will be the deciding factor for choosing the company that will control (ALI). He also reiterated that the nationality of the bidder was not important, Dow Jones reported. He indicated that potential suitors include (DLH), (AFA)/(KLM), and Air One (ADH).

Later, Alitalia (ALI) accepted nonbinding bids from Air France (AFA)/(KLM) and Air One (ADH) parent AP Holding, and a consortium led by Italian attorney Antonio Baldassarre, taking a critical step in a protracted effort to sell off a majority stake of the beleaguered airline. Lufthansa (DLH), also identified as a possible candidate, opted not to present an offer. (ALI) said it was committed to "rapidly identifying industrial and financial subjects committed to carry forward Alitalia (ALI)'s restructuring, development and relaunching" and that its board will meet to select a partner for exclusive negotiations. (AFA)/(KLM) said it "wishes to share with Alitalia (ALI) the benefits of the profitable growth strategy it has successfully implemented over the last four years" and that "by joining Air France (AFA)/(KLM), it would be part of the world's leading air transport group, thus strengthening its position." The Franco-Dutch group did not disclose financial details or the restructuring measures it intends to pursue, indicating only that through the merger, (ALI) "would be able to develop a business plan which is in line with the founding principles of the Survival and Transition Plan prepared by Chairman, Maurizio Prato and his management team." (AFA)/(KLM) added that it intended to position (ALI) to reclaim the Italian market. The Alitalia (ALI) brand would be retained and the company would establish Rome Fiumicino (FCO) as a European and intercontinental hub like Paris Charles de Gaulle and Amsterdam Schiphol, while "many" medium- and long-haul direct services would operate to and from Milan Malpensa (MXP).

AP Holding (ADH) said it was willing to invest more than €4 billion/$5.89 billion if it acquires the flag carrier. "AP Holding's five-year plan 2008 to 2012 foresees improvement and relaunch of the company that will become Europe's fourth largest airline, reaching breakeven in 2009 and profit in 2010," it stated. (ADH) added that most of its investment would be used to renew (ALI)'s medium-haul fleet but it also would acquire new long-haul airplanes. It intends to maintain intercontinental hubs at (FCO) and (MXP) and said the integration of (ALI) and Air One (ADH) would "strengthen Italian leadership on the domestic Italian market." It noted its offer is backed by several banks, including Intesa Sanpaolo, Morgan Stanley, Nomura and Goldman Sachs, which has the role of financial adviser.

Lufthansa (DLH) said that although Alitalia (ALI)'s brand, market, network and management team "were all very promising," the German carrier is well positioned in Italy with flights to 16 destinations and the "strong network" of subsidiary Air Dolomiti, that "perfectly covers the North Italian market. The financial risk of this transaction had to be considered, as well as a potential loss of the investment grade rating and its consequential costs for further multibillion-euro investments."

Ryanair (RYR) called on the European Commission (EC) to block Air France (AFA)/(KLM) from buying Alitalia (ALI) "until both airlines have paid back a combined €2.7 billion/$3.9 billion in illegal state aid received from the French and Italian governments." (RYR) filed documents in the European Court of First Instance stating that the (EC) has failed to act on a complaint it submitted 18 months ago alleging "€1 billion worth of state aid to Air France (AFA) in the form of unlawful reduced domestic airport charges." It also previously lodged a similar complaint with the (EC) claiming that Alitalia (ALI) had received "€1.7 billion [in] illegal state aid . . . in the form of debt writeoffs." Ryanair (RYR) said that "despite these flagrant breaches of state aid rules, the European Commission (EC) has failed to act on either case in the last two years."

Air France (AFA)/(KLM)'s plan to concentrate Alitalia (ALI)'s operations at Rome Fiumicino (FCO), appear to have won the backing of (ALI) Chairman, Maurizio Prato, who told "Corriere della Sera" that the Franco-Dutch bid "is based on Alitalia (ALI)'s own plan with integrations and changes," while rival Air One (ADH) presented a bid containing "some generic statements" and (ALI) "still need[s] to understand how the [Air One (ADH)] plan will actually work."

(AFA)/(KLM), Air One (ADH) parent, AP Holding, and a consortium headed by Italian attorney Antonio Baldassarre, submitted separate bids to purchase the state's 49.9% share in Alitalia (ALI), which three months ago said it was "no longer able to operate efficiently out of two hubs." Air One (ADH)'s plan reportedly calls for maintaining Milan Malpensa (MXP)'s hub status.

"The bottom line of [(AFA)/(KLM)'s] plan is that there will still be an Alitalia (ALI)," Prato told the paper. Air One (ADH), he said, planned to increase and renew the fleet, while remaining strong at both (FCO) and (MXP). No other details were provided and he confirmed that (ALI) would consider the Baldassare offer as well, according to press reports from Rome.

Intesa Sanpaolo, the bank behind Air One (ADH)'s bid, defended its plan. (CEO), Corrado Passera told reporters, "Air France(AFA)/(KLM)'s bid would make Alitalia (ALI) a unit within a rival group . . . It would be like giving up, like saying, 'We have mismanaged it for many years and now let's throw it away'." The (ALI) board has suggested it will meet this week to select a negotiating partner.

The Alitalia (ALI) board is scheduled to meet to discuss bids by Air France (AFA)/(KLM), Air One (ADH)/AP Holding, and a consortium led by an Italian attorney. The company said that "at the end of the . . . meeting, a press release will be issued announcing the decisions taken." (AFA)/(KLM) Chairman, Jean-Cyril Spinetta promised in Milan that his company's bid does not include cuts at the loss-making flag carrier. "Our plan is a plan for development and growth, certainly not a plan, that consists of reducing the size of Alitalia (ALI)," he said, according to "Thomson Financial," adding that (AFA)/(KLM)'s intention "is certainly not to turn Alitalia (ALI) into a regional company."

In anticipation of the decision of the Alitalia (ALI) board on the bidder with which (ALI) will enter exclusive talks for sale of the government's 49.9% stake, Air France (AFA)/(KLM) and Air One (ADH) each outlined their plans for the loss-making flag carrier. (AFA)/(KLM)'s nonbinding offer includes purchase of 100% of the shares of (ALI) through an exchange offer and 100% of its convertible bonds - - although it failed to mention its share price offer - - in addition to an immediate injection of "at least" €750 million/$1.08 billion through a capital increase open to all shareholders and to be fully underwritten by the group. It stressed that it is committed to reposition Alitalia (ALI) "as a strong national flag carrier with world coverage" and said a large part of its investment will be used to upgrade cabin comfort and ground services. It will renew (ALI)'s MD-80 short/medium-haul fleet, as well as its 767 long-haul fleet. "After the recovery phase, further investments will ensure the growth of the fleet and enable Alitalia (ALI) to expand its network from a healthy position," (AFA)/(KLM) said. It also said its recovery and re-launch plan will not add any more job cuts to (ALI)'s current plan, which reportedly foresees some -1,700 redundancies.

AP Holding, which controls Italy's largest privately held carrier, Air One (ADH), said it offered €0.01 per share and plans a total investment of €5.3 billion by 2012, encompassing a capital increase of at least €1 billion and €3 billion for the purchase of 130 new airplanes (90 A320s, 20 A330s and 20 regional airplanes). It would re-launch the Alitalia (ALI) brand and pledged that the new airline "will immediately become the fourth [largest] European full-service operator." (ADH) anticipates that integration of the two carriers will lead to a nearly -€900 million reduction in operating costs owing to the synergy between the two networks, a new operating model with six domestic bases (Milan, Rome, Catania, Venice, Naples, Turin), consolidation of (ALI) Servizi and Air One (ADH) Technic and other initiatives. Its plan anticipates that some 2,750 employees of (ALI) Fly, the airline entity, will be affected by the restructuring along with 1,050 at (ALI) Servizi.

The Alitalia (ALI) board once again delayed its decision regarding a negotiating partner for the Italian government's 49.9% stake in the carrier, by which time it said it expects to have a recommendation from its adviser Citigroup. The board had deferred its decision following receipt of a notification of interest from a consortium comprising SA Holdings, Evergreen LLC and THL Transportation. That grouping has now notified (ALI) that it was withdrawing its interest, leaving nonbinding bids from Air France (AFA)/(KLM) and Air One (ADH) parent AP Holding on the table. Alitalia (ALI) said it concluded its evaluation of those bids after receiving "further clarifications and additions" from the bidders, but still elected to reconvene the board again later for a decision. According to multiple press reports from Italy, the government cannot reach a consensus regarding the divestiture of its stake. While (ALI) Chairman, Maurizio Prato has indicated his preference for (AFA)/(KLM), there is some government sentiment to maintain Italian ownership. Deputy Prime Minister, Francesco Rutelli said in televised comments cited by "Reuters," that he has not rejected completely a foreign bid, but that "If Air France (AFA) wants to sit at the table, it has to act in Italy's interests, rather than its commercial interests." Prime Minister, Romano Prodi is scheduled to meet with French President, Nicolas Sarkozy, with a meeting of the Italian cabinet set the day later, according to press reports.

The world now will have to wait until next month to learn the identity of Alitalia (ALI)'s savior, as the Italian government decided to hold off until at least mid-January to determine with whom to negotiate the sale of its 49.9% stake. One day after the (ALI) board opted to defer its own vote, while it waited for an analysis from Citigroup, the office of Prime Minister, Romano Prodi announced that the government "will evaluate the claims made by the board . . . [and] expects to conclude its assessment within the first half of January." Air France (AFA)/(KLM) and Air One (ADH) parent, AP Holding remain in contention. The Prime Minister's office added that "the government will be thorough and will see whether the proposal of the [selected bidder] . . . conforms to the general interest." While a recent meeting between Prodi and French President, Nicolas Sarkozy will not feature discussion of Alitalia (ALI), according to comments from Prodi, cited in widespread press reports, Air One (ADH) head, Carlo Toto said he does expect an audience with the government before a decision is made. "We also believe that . . . for the proper evaluation of our proposal, it would be useful to explain our position to the government," he said, according to "Bloomberg News." Some unconfirmed press reports from Italy, said the government may go with the rumored preference of the (ALI) board - - (AFA)/(KLM) - -, but will ask the Franco-Dutch group to offer to Air One (ADH) assets it may not require, such as extra slots.

Italian Transport Minister, Alessandro Bianchi told Il Sole 24 Ore that the government is completely satisfied with the nonbinding bids for Alitalia (ALI) offered by Air France (AFA)/(KLM) and Air One (ADH) parent, AP Holding and will look to take time over the next two weeks to "eliminate weak points, suggest corrections that further the public interest" and "work within the offers to improve them," "Reuters" reported. The (ALI) board is scheduled to select an exclusive negotiating partner immediately, although the government has said it will not approve that selection until next month. "The company should continue to study both offers, make them available to the government and the competent ministers, and then we'll reach a shared decision," Bianchi said, according to "Thomson Financial."

The Board of Directors of Alitalia (ali) has decided to choose Air France (AFA)/(KLM) as its preferred bidder and considered its offer the best guarantee for the national carrier's future, Italian media reported. The decision came after a board meeting, which lasted almost seven hours and saw Air France (AFA)/(KLM) win out over a rival offer presented by the AP Holding, the parent company of Italy's biggest private carrier Air One (ADH). The board's decision is, in fact, only a suggestion to the government, which has the final word on the sale of the Treasury Ministry's controlling 49.9% stake in Alitalia (ALI). The Italian government said earlier that it would make a decision on the board's recommendation by the middle of January. (AFA)/(KLM) said it is a top priority to renew Alitalia (ALI)'s fleet, and that the combination of the three European brands "will be able to offer clients an unparalleled international network." (AFA/(KLM)'s plan calls for returning Alitalia (ALI) to profitability by 2010, and includes total investments of 6.5 billion euros through 2015.

However, many analysts believed the AP Holding will now launch a political offensive to persuade the government to go against the Alitalia (ALI) board's recommendation. The AP Holding confirmed it will be offering 1 euro cent per Alitalia (ALI) share, compared to a reported 35 cents by (AFA)/(KLM), and that it expected Alitalia (ALI)to break even by 2009 and to return to profit by 2010. The AP Holding would invest a total of 5 billion euros in Alitalia (ALI), 1 billion to boost the company's capital and 4 to renew its fleet.

The Italian government owns a 49.9% share and has decided to sell most stake at the end of last year. An auction failed this summer after bidders complained they were denied access to Alitalia (ALI) books and not guaranteed full control of the airline.

January 2008: 2007 statistics: 38.83 billion (RPK)s passenger traffic +2.1%; +.9% capacity (ASK)s; +.9 load factor for 74.3% LF. SEE ATTACHED COMPARISON CHART TO SELECTED OPERATORS - "ALI-2007-STATS."

Exclusive negotiations between Air France (AFA)/(KLM) and Alitalia (ALI) on a possible merger were scheduled following the official approval of Italian Minister of Finance Tommaso Padoa-Schoppia, according to widespread press reports. "We are very satisfied with this decision, which represents a key stage in the process, and we are committed to rapidly reaching a solid agreement that paves the way to the profitable growth of Alitalia (ALI)," (AFA)/(KLM) Chairman & (CEO), Jean-Cyril Spinetta said. The (ALI) board unanimously backed (AFA)/(KLM)'s nonbinding bid on December 21. The initial negotiating phase will last eight weeks.

The Franco-Dutch group's interest in consolidation does not end with (ALI). On Christmas Eve, it announced an agreement to acquire (VLM) Airlines. Financial details of the transaction were not disclosed. VLM, which won Air Transport World (ATW)'s "Regional Airline of the Year" award two years ago, operates a fleet of 18 F 50s and one B Ae 146 and is the largest carrier at London City Airport (LCY). "The strengths of the Air France (AFA)/(KLM) Group will provide the necessary support to take the development of (VLM) Airlines to the next level," (VLM), Managing Director, Johan Vanneste said. The carrier, which is expected to report its 10th consecutive profitable year in 2007 on a +10% growth in passenger numbers and turnover, will cooperate with Dublin-based CityJet, a 100% subsidiary of (AFA) that also operates out of (LCY). "Both networks are highly complementary and the new combined network will link London City (LCY) with major European business and financial centers," CityJet (CEO) Geoffrey O'Byrne-White commented.

Alitalia (ALI) Chairman & (CEO) Maurizio Prato said early negotiations with Air France (AFA)/(KLM) "are going rather well," according to press reports, with the early buzz surrounding the recently launched talks centering on the amount of (ALI) that will remain with the Italian state, once (AFA)/(KLM) takes over, and a share swap is completed. Originally pegged at 3%, the stake may rise to 5%, if Prato and the (UGL) union have their way, "Reuters' reported. (UGL) Secretary General, Renata Polverini said a 5% stake would be warranted if Alitalia (ALI) repurchases the 51% of (ALI) Servizi AZS), it sold to Fintecna two years ago, according to "Thomson Financial." The government's 49.9% share of Alitalia (ALI) would be worth 3% of a combined (AFA)/(KLM)/(ALI), with (AZS) worth a further 2%.

Alitalia (ALI) announced the sale of three of its 13 slot pairs at London Heathrow for €92 million/$134.2 million. It called the slots "nonstrategic," and said it will report a +€54 million gain on its 2007 balance sheet, and a +€38 million gain in 2008.

February 2008: The Alitalia (ALI) board met to approve its 2008 budget and said it would look to raise about €750 million/$1.1 billion over the next five months, in order to maintain its cash in hand "at adequate operating levels," as speculation swirled in Italy about the effect that the fall of Prime Minister Romano Prodi's government will have on (ALI)'s merger with Air France (AFA)/(KLM).
(ALI) said its cash in hand dropped -7.1% from the end of November to €367 million. To complicate matters, Air One (ADH) continues to press its case to acquire the government's 49.9% stake in (ALI) and has filed a lawsuit in regional court challenging the government's decision to negotiate exclusively with (AFA)/(KLM), according to a statement cited by media reports from Rome. "We're asking for a procedure which can ensure that, after clear rules are fixed, several offers can be compared instead of negotiations with just one party," Air One (ADH) said, according to Dow Jones. The (CEO) of its financial backer, the Intesa Sanpaolo bank, told "Corriere della Sera" that "there are still many questions open . . . Everything still has to be sorted out." Prodi backed the (AFA)/(KLM) bid, and his departure and the possibility of new elections may affect the sale. "If the Prodi government goes to elections, nothing stops. The procedure [for (ALI)] is fixed and it would be unreasonable to stop it," Transport Minister, Alessandro Bianchi said, according to Thomson Financial. "If, instead, there is another government, then there is the need to re-discuss everything."

Air One (ADH) has support in the north, where local interests are worried about (AFA)/(KLM)'s plan to scale down (ALI)'s operation in Milan.

February 2008: Alitalia (ALI) reported significantly improved financial results for 2007 but stressed that its survival continues to be "increasingly linked" to its ability to raise approximately €750 million by mid-year. The company, which currently is negotiating the terms of a merger with Air France (AFA)/(KLM), suffered a -€363.9 million pre-tax loss last year, narrowed from a -€605.2 million pre-tax deficit in 2006. Operating revenue climbed +2.8% year-over-year to €4.86 billion against a -2.5% decrease in costs to €5.06 billion. The operating loss of -€202.9 million represented an improvement over the -€465.7 million result, that was affected by (ALI)s decision to write down of the value of its fleet.

Group turnover received a +€54 million boost from the sale of three pairs of slots at London Heathrow, +€44 million related to a dispute with an airport management company and +€40 million in hedging revenue. Conversely, labor disruptions resulted in approximately -€150 million in lost revenue, (ALI) said.

The airline reported a +1.1% year-over-year increase in passenger traffic (RPK)s, a +0.1% climb in capacity, and a +0.7-point rise in load factor. Yield fell -3.4% and unit revenue was down -2.4%. (ALI) blamed the decline in yield on "pressure from low-cost carriers and unfavorable exchange rates for the intercontinental sector." It operated 186 airplanes at year end, down one from 2006.

Fourth-quarter pre-tax loss narrowed to -€109 million from -€330.4 million in the year-ago period, while operating result improved to a -€56.5 million deficit from a -€293.1 million loss in the final three months of 2006.

Alitalia (ALI) said that it has released an unidentified number of summer slots at Milan Malpensa as it moves toward consolidating its operation in Rome. Milan airport operator (SEA) reportedly countered with a lawsuit seeking €1.25 billion/$1.86 billion in damages, which (SEA) Chairman, Giuseppe Bonomi said was based on the "serious damage" (ALI)'s decision would cause and the alleged violation of a hub agreement, "Thomson Financial" reported. Bonomi said the slot reduction would result in declines of -6 million passengers and -€70 million in revenue, as (ALI)'s daily flights fall to 75 from 660. He told "Thomson" that finding a leading airline to replace the traffic could not happen until 2010, and that the interim would be "a period of crisis."

A J Walter Leasing (AJW) signed a six-year, $6 million deal with Alitalia (ALI) to provide A321 spare parts.

Air France (AFA)/(KLM) will have to wait until at least February 20 to conclude negotiations with Alitalia (ALI), following an Italian court's decision to hold a hearing that day on Air One (ADH)'s challenge to the exclusive discussions. (ALI) Chairman, Maurizio Prato said (AFA)/(KLM) had intended to begin meeting with (ALI) unions starting February 15, according to "Reuters." Doubts about the sale's progress already had risen with the recent resignation of the Italian Prime Minister and (AFA)/(KLM) supporter, Romano Prodi. New elections are scheduled for April. Prodi told media that the sale remains "necessary and indispensable" and that government officials will continue to try to push it through.

(ALI) released details of its revised network plan, set to take effect on March 31. Calling the management of two hubs an "impossibility" and committing itself to a "return to its traditional mission as a carrier serving Italy," it said most of its flights to Milan Malpensa constitute feeder traffic, often for other carriers, and represent "a burdensome and unsustainable duplication" of traffic to/from Milan Linate. It will eliminate mainline service to Rimini, Olbia and Perugia in Italy, seven European destinations and four long-haul cities (Dakar, Shanghai, Mumbai, and Delhi). Weekly flights from Rome Fiumicino (FCO) will increase +13.9% year-over-year to 1,601 and the network will feature 24 domestic, 45 European and 14 intercontinental destinations.

Later, Air France (AFA)/(KLM)'s negotiations with Alitalia (ALI) received a slight boost, when Renato Brunetta, an official with the Forza Italia (FI) party that has been an opponent of the sale, told reporters that while (FI) believes the government succeeding that of outgoing Prime Minister, Romano Prodi should conclude the deal, if one is struck between (AFA)/(KLM) and (ALI) in the meantime, (FI) "would respect it." (FI) reportedly is leading opinion polls ahead of the April elections.

March 2008: The Alitalia (ALI) Group said its net debt as of January 31 was €1.28 billion/$1.95 billion, up +6.8% from a month prior. It made €3 million in debt repayments last month.

Silvio Berlusconi, head of the Forza Italia (FI) party and the favorite to be elected Italy's new prime minister in April, said that he opposed Air France (AFA)/(KLM)'s acquisition of Alitalia (ALI). The comments, made on domestic television, conflict with those by Lega Nord (LN) officials last month. (LN) is allied to the center-right coalition headed by (FI). "On Alitalia (ALI), I am critical, very critical. I think Italy should not be deprived of its flag carrier," Berlusconi reportedly told Sky TV 24. He suggested that Italian companies form a consortium to buy and manage the airline. He also defended Milan Malpensa's status as a hub airport, saying that (ALI)/(AFA)/(KLM)'s plan to reduce service in the north is a "grave problem."

Later, The Alitalia (ALI) board unanimously agreed to accept an offer by Air France (AFA)/(KLM) to acquire control of the ailing Italian carrier - - subject, however, to a number of what the parties call "effectiveness conditions" that must be fulfilled by March 31. "The board has carried out its evaluation of the binding offer also in light of the worsened airline sector and macro-economic scenario, as well as considering the critical situation of the company and available alternatives," (ALI) said in a statement, noting that the proposal offers "the appropriate solution" to preserve its assets and to promote both rapid and stable restructuring and long-term development. (AFA)/(KLM) is proposing to acquire 100% of Alitalia (ALI)'s capital via an exchange offer with a parity of one (AFA)/(KLM) share for 160 Alitalia (ALI) shares, valuing the latter's equity at €139 million, or €0.10 per share. (AFA)/(KLM) also will acquire all convertible bonds issued by Alitalia (ALI) at €0.3145 per bond, which was the recent market price, or a total of €608 million. In addition, (AFA)/(KLM) will underwrite a €1 billion capital increase following the closing of the offer. "Its membership of the Air France (AFA)/(KLM) Group together with the implementation of the [new three-year industrial] plan, should enable Alitalia (ALI) to return to operating profit as early as 2009," (AFA)/(KLM) said. But plenty of conditions will have to be fulfilled first, including agreements with unions at both (ALI) Fly and (ALI) Servizi. The Industrial Plan 2008 to 2010, which was approved by the board, foresees a reduction of (ALI) Fly's workforce by -1,600 employees by 2010. Reportedly, (AFA)/(KLM) Chairman, Jean-Cyril Spinetta and (ALI) Chairman, Maurizio Prato are scheduled to meet with (ALI)'s 9 trade unions.

(AFA)/(KLM) also wants a "formal written" undertaking from the appropriate Italian governmental authority to maintain (ALI)'s current portfolio of air traffic rights and to address future traffic requests in a transparent and nondiscriminatory manner. Further, it wants a signed agreement between (ALI) and Aeroporti di Roma, operator of both Roman airports, firming service standards, as well as a similar accord among (ALI), Fintecna, and (ALI) Servizi. Lastly, (AFA)/(KLM) wants an "applicable solution to definitely remove the risk connected to the Milan airports operator (SEA) claim." (SEA) is seeking €1.25 billion in damages from (ALI) for cutting flights at Milan Malpensa (MXP).

(AFA)/(KLM)'s industrial plan for the restructuring and relaunch of (ALI) calls for a single hub at Rome Fiumicino and a drastic cutback of medium- and long-haul flights from (MXP). It also plans to develop (ALI) low-cost subsidiary, Volare Airlines (VLR) similarly to Transavia (TAV). Both (AFA)/(KLM) and (ALI) said they expect the European Union (EU) clearance by July.

Air France (AFA)/(KLM) said it has secured the approval of the Italian Ministry of Economy and Finance for its bid for Alitalia (ALI), but the road ahead may be difficult as a majority of trade unions, and the future government, still must sign off on the deal, (AFA)/(KLM) Chief, Jean-Cyril Spinetta said. "The deal is at risk. But I still have hope," he said, according to widespread press reports. "Everyone knows that the margin for maneuver to improve the plan is nonexistent or extremely limited." (AFA)/(KLM) set March 31 as a deadline for certain conditions to met, including dismissal of a lawsuit by Milan airports operator (SEA). Consent of the majority of (ALI)'s trade unions is critical as well. "If there is not this support, it would be very difficult for Air France (AFA)/(KLM) to commit itself to a very difficult economic operation," Spinetta said. He said (AFA)/(KLM ) is willing to delay the phasing out of (ALI)'s cargo operations for two years in order to appease labor groups.

Air France (AFA)/(KLM) confirmed that its restructuring of Alitalia (ALI) will include approximately -1,600 job cuts, fleet downsizing, and the transfer of some 2,800 (ALI) Servizi employees to (ALI) Fly with the remaining (ALI) Servizi staff retained for up to two consecutive periods of four years. State severance schemes will be implemented for the employees who lose their jobs. "The aim of the Air France (AFA)/(KLM) Group is not to take over Alitalia (ALI), but to see whether it is possible to build a major global airline group together with the entire Alitalia (ALI) workforce," (AFA)/(KLM) Chairman & (CEO), Jean-Cyril Spinetta said.

(ALI) Chairman, Maurizio Prato told unions following a meeting with (ALI) and (AFA)/(KLM) executives, that the (AFA)/(KLM) offer was solid and the unions "should take it or leave it," according to "Agence France Presse.: Meanwhile, Silvio Berlusconi, the head of Forza Italia and the favorite to become Italy's new Prime Minister next month, called for a new offer for the airline from domestic interests and said that his sons might participate. "I say that if in Italy there are businessmen with only a bit of pride, they must step forward with an offer and a business plan to avoid this dishonorable end of our national company," he was quoted as saying. "First there was a shady auction, then the negotiations with (AFA)/(KLM) only, which to me seems inadmissible." (AFA)/(KLM) has said the approval of the next government is a condition of its successful acquisition of (ALI).

Later again, Silvio Berlusconi, who is favored to take over as Italian Prime Minister following next month's elections, said that he will reject Air France (AFA)/(KLM)'s acquisition of Alitalia (ALI), if and when he assumes office. A day after calling on Italian bidders to step forward and make an offer, Berlusconi told the "ANSA" news agency, "The response to Air France (AFA)/(KLM) that the next Prime Minister will give, will be a clear 'no,' not because it's against France, but because it's against the conditions as they were presented." He said he was continuing to attempt to muster an Italian bid for the carrier and would be able to present one "in a few days," according to press reports. "I am absolutely confident we can do it with the support of important banks. I am now involved, so it will get done," he said. Outgoing Prime Minister, Romano Prodi reportedly told Berlusconi recently that new offers will be considered, but they should be serious and be presented soon, the "AGI" news agency reported. (AFA/(KLM) said a decision must be made soon. Speaking in Biarritz, (AFA)/(KLM) Commercial Director, Christian Boireau told "Thomson Financial," "What we are asking of Alitalia (ALI) is that it make the necessary changes so as to be able to guarantee this future . . . We know what we can do and this plan must be either accepted or refused, but now is the time, not in two months or in a month."

Later, Air France (AFA)/(KLM) stated it will retain 4,191 out of approximately 7,400 (ALI) Servizi workers under a new plan submitted to unions, rather than the 3,300 it originally anticipated, according to a document accessed by "Reuters." It eventually plans to cut an additional -500 positions, the news agency reported, and still plans to cut approximately -1,600 employees from Alitalia (ALI)'s flying operation and close the cargo subsidiary in 2010.

April 2008: Unable to reach an accord with Alitalia (ALI)'s trade unions following a two-day extension to the negotiations, Air France (AFA)-(KLM) ended its effort to acquire the ailing flag carrier, leaving (ALI)'s future once again up in the air. (AFA)/(KLM) said that when it submitted its final offer for (ALI) last month, it "clearly indicated that [it] was contingent on prior agreement with the trade unions" representing a majority of employees. Despite reportedly offering several concessions as talks reached their climax, (AFA)/(KLM) said a new proposal offered by the unions went too far and "would involve retaining a number of activities generating large-scale losses . . . incompatible with the target of a rapid return to profit." Arguing that its plan for Alitalia (ALI) "would have no chance of success unless it had the backing of the trade unions," (AFA)/(KLM) pulled the plug, saying it "has no mandate from its board . . . to follow up this new proposal." Chairman & (CEO), Jean-Cyril Spinetta said the "breakdown . . . is none of our doing. This is a project I have profoundly believed in and continue to do so, because it would have ensured Alitalia (ALI) a rapid return to profitable growth."

A firm backer of (AFA)/(KLM)'s efforts, (ALI) Chairman, Maurizio Prato subsequently resigned, according to a statement cited by press reports from Rome. "A board meeting has been called, which will decide the appropriate steps," (ALI) said, adding that the contract it signed with (AFA)/(KLM) following a period of exclusive negotiation "is no longer valid." The events likely will please politicians favored to assume control of the Italian government in the upcoming elections, but Minister of Finance, Tommaso Padoa-Schioppa warned a parliamentary hearing that they may spell doom for the airline. "It would be bitter destiny if the company, dragged down for years because of a perverse relationship with politics, got its mortal blow from exploitation for election purposes or from the lack of a deal with unions," he said. He added that the government could not grant the urgently needed €300 million/$470.9 million bridge loan requested by the airline without the (AFA)/(KLM) takeover, because additional state aid to (ALI) is prohibited by the European Commission (EC).

Later, the Alitalia (ALI) board convened an emergency meeting following Air France (AFA)/(KLM)'s withdrawal from its bid to acquire the ailing Italian flag carrier and named Aristide Police as chairman replacing the resigned Maurizio Prato. The board maintained that the (AFA)/(KLM) deal remains "suitable to ensure Alitalia (ALI) can return to profitable growth," according to "Reuters," and that it would "evaluate the existence of the necessary conditions to continue doing business" at an upcoming meeting. However, time is running out. (ALI)'s cash reserves dropped to €180 million in February and the Milan Stock Exchange has suspended its shares. The outgoing government, which had backed (AFA)/(KLM)'s proposal, issued a statement saying it was committed to ensuring Alitalia (ALI) remained operational and urged the board to take urgent action to ensure it keeps flying. It also said it would try to determine if (AFA)/(KLM)'s decision was final or if there was a chance it would be willing to restart talks with (ALI)'s unions, which indicated they were open to resumption of negotiations.

Later, newly elected Italian Prime Minister, Silvio Berlusconi, who won a third nonconsecutive term in recent elections, said saving the ailing flag carrier would be a priority of his government and that "tens" of Italian investors were ready to inject capital into the airline. "I'll get a grip on the situation, doing everything necessary so that the flagship company operates and remains at the service of tourism and of the Italian economy," he said, having previously voiced his opposition to a foreign/Air France (AFA)-(KLM) takeover. Time is short, however, as the Civil Aviation Authority (CAA) reportedly has threatened to suspend (ALI)'s license, if it does not come up with plans to guarantee a year's worth of operating funds in the next 3 weeks. (ALI)'s new Chairman, Aristide Police reportedly told unions that the outgoing government has declined to extend a bridge loan to the carrier and that it is nearing bankruptcy.

Newly elected Italian Prime Minister, Silvio Berlusconi kept his promise and focused on Alitalia (ALI)'s future during his 1st week in office, inviting Aeroflot (ARO) to negotiate a possible buy-in. However, the European Commission (EC) ended discussion of further state aid, saying the Italian government could not inject further funds until 2011. "The situation is open. We have nothing against Air France (AFA), but I would like to see [negotiations] give rise to a great international group at the heart of which Alitalia (ALI) would have the same rights as Air France (AFA) and (KLM)," Berlusconi said, as quoted by Agence France Presse (AFP). "Once negotiations with Air France (AFA) are concluded, we will be ready to extend an eventual accord to other companies. There could be a discussion between Aeroflot (ARO) and Alitalia (ALI) to examine an eventual strengthening of the 2 through the birth of a major international group."

Russian President, Vladimir Putin, who met with Berlusconi recently, said he had "spoken with the head of the Aeroflot (ARO) board and he is ready to resume contacts with Alitalia (ALI)." Aeroflot (ARO) was an initial bidder for (ALI) last year, but pulled out in November. Berlusconi also said he intends to speak with French President, Nicolas Sarkozy. "If we went back to the initial project for Alitalia (ALI) which gave the same weight to Alitalia (ALI) as [Air France (AFA) and (KLM)] as well as being Italian orientated, I would be happy to discuss the possibility and once I take office I will speak with Sarkozy," he said, according to (AGI).

Meanwhile, an (EC) spokesperson put paid to the hope of further state aid, saying all of the government's dealings with (ALI) "must be carried out under conditions that would be acceptable to a private investor," according to press reports. Berlusconi reportedly supports a €100 to €150 million/$159.3 to $238.9 million bridge loan, which would have to be extended under market conditions, (AFP) and "Reuters" reported.

The outgoing Italian government approved a €300 million/$475.7 million loan to Alitalia (ALI), that may prevent the cash-strapped airline from going bankrupt before newly elected Prime Minister, Silvio Berlusconi finds new investors. Air France (AFA)-(KLM) formally withdrew its offer to acquire (ALI), saying, "The conditions precedent that had to be satisfied prior to launching were not fulfilled." Berlusconi was attempting to find additional investors in an effort to mitigate (AFA)-(KLM)'s potential influence in a restructured company, although now faced with the prospect of presiding over (ALI)'s bankruptcy, the outgoing government has chosen to risk the wrath of the European Commission (EC) regulators with the loan. Outgoing Prime Minister, Romano Prodi said Berlusconi, who is expected to take office next month, had asked for "a much more substantive loan," "Bloomberg News" reported, adding that an (EC) spokesperson declined comment. (ALI) reportedly will have to pay back the loan by year end. Aeroflot (ARO) and Air One (ADH) financier, Intesa Sanpaolo each expressed cautious interest in (ALI), according to various press reports.

Alitalia (ALI) scheduled a board meeting following the decision by the outgoing government to grant the ailing carrier a €300 million/$477.9 million emergency bridge loan to continue operations. (ALI)'s management is scheduled to meet with its unions. The European Commission (EC) confirmed it had not received official notification of the loan and said it could not take a decision on whether it was permissible under state aid and competition rules. Meanwhile, Prime Minister-elect, Silvio Berlusconi vowed that Alitalia (ALI) will be rescued by an Italian consortium by late May, though he warned that severe job cuts would be inevitable. "This [loan] has given Alitalia (ALI) the means to survive a few months, time which will be used by a group of Italian entrepreneurs, aided by banks, professionals and airlines, to study Alitalia (ALI)'s accounts," Berlusconi said during a radio interview widely cited by Italian media. "After due diligence of three, four or five weeks, this new group will present a binding offer and take over the running of Alitalia (ALI), which will involve a painful reduction in personnel," he added without naming any potential investor.

The European Commission (EC) indicated it had concerns about whether the €300 million/$473.6 million emergency bridge loan offered by the Italian government to Alitalia (ALI) constitutes illegal state aid.
"We have doubts about the nature of the measures and we want to have a better understanding of the details," Director General Transport, spokesperson Michele Cercone said. "We want to understand if this is a commercial operation as the Italian authorities claim." Italy's outgoing government vowed it would respond to the (EC) within 10 working days. Under (EU) rules, (ALI) is not allowed any further state aid until 2011. The (EC) cleared (ALI)'s last subsidy in 2001 and approved a total of €1.4 billion in government restructuring aid to the flag carrier between 1997 and 2001. Incoming Prime Minister, Silvio Berlusconi immediately criticised the (EC) for questioning the loan, saying, "The European Union (EU) should help just causes and not create difficulties."

Several airlines condemned the loan. "This latest bailout makes a mockery of (EU) state aid rules," Ryanair (RYR) Head of Legal Affairs, Jim Callaghan said. "Propping up an inefficient national airline, which would have gone bankrupt long ago, is simply illegal." For Finnair (FIN) President & (CEO), Jukka Hienonen, "The loan is yet another link in a chain of subsidies that has been going on for years whereby the Italian government, against the (EU)'s explicit forbiddance, pumps money into an ailing national airline." He said this subsidy "will disappear into the gaping void of the airline's inefficient cost structure. The artificial resuscitation of a badly managed company distorts competition and the overcapacity that exists in Europe cannot dissolve naturally."

Later, Italian Prime Minister-elect, Silvio Berlusconi threatened to re-nationalize Alitalia (ALI) if the European Commission (EC) continues to question the €300 million/$469.1 million bridge loan, the outgoing government granted the virtually bankrupt company. "If they continue whining, we could take a decision in which Alitalia (ALI) could be bought by the state, by the state railways," Berlusconi was quoted as saying. "It's a threat, not a decision." The (EC) is neutral on whether a company is privately or publicly owned, competition spokesperson Jonathan Todd noted. However, its regulation on state aid applies if nationalization or privatization involves a transfer of state funds to the company, "over and above what is a reasonable purchase price at market value."

Meanwhile, (ALI)'s nine unions have been invited to meet representatives of an unidentified group of investors interested in buying the government's stake, Italian media reported. Pirelli Chairman, Marco Tronchetti Provera indicated that the Milan-based multinational, best known for its tires, is ready to invest in either an Italian consortium, that would take over (ALI) or in Milan Malpensa (MXP), "Thomson Financial" reported. "For Alitalia (ALI), we are ready to make a contribution, clearly a few million euros, if there is a clear and transparent plan for Milan Malpensa that protects the economic interests of the country and also of Pirelli," he said.

The USA Dept of Transportation (DOT) tentatively approved transatlantic antitrust immunity for six SkyTeam (STM) members - - Air France (AFA), Delta Air Lines (DAL), (KLM), Northwest Airlines (NWA), Alitalia (ALI), and (CSA) Czech Airlines - - nearly four years after Delta (DAL) and Northwest (NWA) first petitioned the (DOT) to allow the alliance. After an initial denial, they reapplied last June with a substantially revised agreement. Currently, (DAL) has antitrust immunity with (AFA), Alitalia (ALI), and (CSA), while (NWA) enjoys immunity with (KLM). The (DOT) said it "concluded that the proposed alliance is in the public interest, because it features a proposed new and highly integrated joint venture, that will likely produce efficiencies and provide consumers with additional price and service options, such as lower fares and more nonstop and connecting flights." In response, (DAL) Executive VP Network Planning & Revenue Management, Glen Hauenstein said he was "pleased" that the (DOT) "recognizes once again that antitrust immunity offers significant advantages to customers" and that the grant will "significantly strengthen the SkyTeam (STM) alliance." (AFA) and (KLM) said the preliminary decision "seems to be a logical response to both the Air France (AFA)-(KLM) merger and the new European Union (EU)-USA "Open Skies" agreement," and that they would "welcome a quick and final decision from the USA Authorities." The immunity will enable (AFA), (KLM), (DAL), and (NWA) to establish a joint venture agreement among the four and ultimately integrate their transatlantic operations. (AFA) and (DAL) last year initiated their own partnership modeled after the (NWA)/(KLM) tie-up launched a decade ago. The (DOT) proposed that as a condition of obtaining immunity, the carriers must launch their alliance within 18 months.

May 2008: Alitalia (ALI) reported a 1st-quarter pre-tax loss of -€214.8 million/-$333.1 million, +41% higher than the -€152 million pre-tax loss in the year-ago period, citing higher fuel costs and lower traffic revenue as the main culprits. Total consolidated revenue slipped -0.4% to €1.06 billion, with passenger revenue dropping -4.8% to €784.9 million from €824.8 million, a year earlier. Operating costs were down -3.9% owing to lower capacity, but operating loss still widened +42.1% to -€160.9 million from -€113.3 million last year.

(ALI) said passenger traffic fell -10% on a -5.2% cut in (ASK)s capacity, but yield increased +4.6%, mainly due to its new marketing strategy that "aims to increase profitability, rather than preserve volumes." (RASK) declined -0.7%. It conceded its domestic market share lost -4.9 points, compared to the 1st quarter of 2007, reaching 40.8%. Networkwide passenger load factor deteriorated -3.5 points to 66.4% LF.

Looking forward, the (ALI) board candidly stated that it is in "an equity situation which is no longer able to sustain the company's forecast operations" owing to a combination of factors, especially uncertainty about its future, following the failure to reach a tie-up agreement with Air France (AFA)/(KLM). It said it suffers from the continual erosion of its commercial credibility with "marked" repercussions on sales growth, and is affected severely by "ever higher increases in fuel costs." While a €300 million bridge loan has given it sufficient liquidity for now, it reiterated "the need for recapitalization to be carried out as quickly as possible" to strengthen its equity. The group's net equity on March 31 amounted to just €96 million.

The European Commission (EC) has given Italian officials until May 19 to respond to its request for more information on the €300 million bridge loan the outgoing government awarded Alitalia (ALI) last month. Meanwhile, speculation continues on possible interest in (ALI), including from Air One (ADH) and Lufthansa (DLH). Air One (ADH) is in contact with Bruno Ermolli, the consultant charged by incoming Prime Minister, Silvio Berlusconi to form an Italian consortium willing to acquire (ALI), Italian media reported, citing Air One (ADH) board member, Giovanni Malago. (DLH) declined to comment on a report in "Il Messaggero" that it had discussed a possible bid with Italian bank UniCredit, which in turn denied the rumor.

The Italian government decided to convert its €300 million/$471.2 million bridge loan to (ALI) into an asset on the airline's books in an effort to win auditor approval of its 2007 finances, "Reuters" reported. "It is a temporary measure so that the internal auditors don't bring up questions," Economy Minister, Giulio Tremonti said.

Alitalia (ALI) Group said its net debt at the close of the first quarter was €1.35 billion/$2.1 billion, a -1.1% reduction from the figure on February 29. It had €180 million in cash-in-hand and short-term financial credits.

The USA Department of Transportation (DOT) announced a grant of transatlantic antitrust immunity to SkyTeam (STM) partners Delta Air Lines (DAL), Northwest Airlines (NWA), Air France (AFA), (CSA) Czech Airlines, Alitalia (ALI), and (KLM), upholding a tentative approval issued last month. The 6 now will be able to "coordinate their transatlantic fares, services and capacity as if they were a single carrier in these markets, subject to certain conditions," the (DOT) said, adding that the approval is unrelated to (DAL)'s and (NWA)'s merger plans. Those are subject to a separate review. The (DOT) said the alliance "is in the public interest, because it features a proposed new and highly integrated joint venture, that will likely produce efficiencies and provide consumers with additional price and service options," but that the alliance must be implemented within 18 months as a condition of immunity. (NWA) President & (CEO) Doug Steenland said, "This enhanced ability to coordinate among the carriers will provide a more positive, seamless experience for our customers with single-ticketing, seamless baggage handling and greater customer ease and convenience. It is also good news in light of skyrocketing fuel costs."

An Italian administrative court ordered that a new tender be organized for Volare (VLR) within 15 days, confirming that (ALI)'s 2006 acquisition of (VLR) violated procedure. (ALI) rival, Air One (ADH) also wanted Volare (VLR) and brought the case to court.

June 2008: The Italian government authorized Finance Minister, Giulio Tremonti to organize the sale of its 49.9% stake in Alitalia (ALI), with Intesa Sanpaolo serving as an adviser. Tremonti told reporters that there will be no auction and the government will disclose no information about the process, until it receives an offer, saying, "The situation is so serious and urgent that the usual privatization procedures which failed in the past have to be ruled out," according to "Reuters." The government was scheduled to present terms of its €300 million/$466.5 million emergency loan to (ALI) to the European Commission (EC), "Bloomberg News" said. The government previously had converted the loan to an asset on the company's books and Tremonti said he expected the money to keep (ALI) afloat for about one year. The Alitalia (ALI) Group carried €1.36 billion of net debt at the close of April, up +0.4% from the prior month. It had €174 million in cash and short-term financial credits.

The European Commission (EC) confirmed the launch of an in-depth investigation into the Italian government's €300 million/$465 million emergency bridge loan to Alitalia (ALI), granted in April under a specific decree-law. A second decree-law on May 27 allowed (ALI) to incorporate that sum into its equity capital, enabling it to avoid bankruptcy proceedings and permit its possible privatization. "The Commission (EC) considers, at this stage, that this measure in favor of Alitalia (ALI) could constitute state aid that is incompatible with the community rules in force, and could therefore give the company an unjustified advantage over its competitors," the (EC) said, noting that as (ALI) already has benefited from rescue and restructuring aid, Italy cannot "in principle grant it any more aid." The (EC) said its probe would focus on whether the loan was made on the same terms as a private investor and would allow all interested parties to voice their opinions. It has up to 18 months to conduct the investigation.

(ALI) maintained the loan is in line with (EU) law. "It's not a coincidence that it was called a bridging loan," Chairman Aristide Police said, according to "Agence France Presse." "It is not aid. It's a loan with terms and pretty high interest rates."

July 2008: Alitalia (ALI) is facing its "last chance" for survival and needs a "complete break" from its past, Chairman Aristide Police told shareholders at the ailing flag carrier's annual meeting. "We are facing the last chance and we cannot risk missing it," he said. "We will certainly need to follow new paths, which will represent a complete break with the past, abandoning quickly what is unjustifiable and inadequate." He said he was waiting for proposals from Intesa Sanpaolo on how to rescue the carrier. The government appointed Intesa last month to draw up a strategy to revive the airline. "Within days, we'll know if the adviser will be able to propose a suitable strategy for recovery and development," Police said, although Italian media reported it may take the bank until the end of this month to do so. According to some reports, one plan might be to split up (ALI) and merge its airline operation with Air One (ADH), which partnered with Intesa in its bid for Alitalia (ALI) last year.

The Chairman also confirmed that (ALI) closed the 2007 financial year with a consolidated net loss of -€495 million/-$781 million and an operating loss of -€310 million, and that (KPMG) was appointed to replace Deloitte & Touche as auditors.

(ALI) said its group net debt stood at €1.12 billion at the end of May , compared with €1.36 billion at the close of April. It noted that the May figure did not include the €300 million bridge loan from the government that later was converted into company capital. Short-term liquidity increased from €174 million at the end of April, to €388 million at the end of May, "mainly due to cashing the above-mentioned amount [the bridge loan]," it said in a statement.

Later, Italian Prime Minister, Silvio Berlusconi said Alitalia (ALI) has attracted significant investor interest, and the government "will have to say no, because the offer is over twice what is necessary," according to "Thomson Financial." "We are working on the issue and I am personally convinced that we will be able to present a new (ALI) with a business plan for a profitable flagship carrier fairly soon."

August 2008: Alitalia (ALI) is still flying long haul operations to Sao Paulo, New York, and Tokyo from Milan Malpensa.

Italian Prime Minister, Silvio Berlusconi said that his government is in talks with a "large foreign company" about forming an alliance with Alitalia (ALI). "We are in talks with a big foreign company for an alliance on an international level, exactly the opposite of the hypothesis of the fire sale to Air France (AFA)/(KLM), which the previous government wanted, which among other things, included -7,000 job cuts," Berlusconi said in a television interview. "We already have the industrial plan. We have the investors. We have the needed capital," he stressed, conceding there would be "job cuts for sure. We'll try to keep them to a minimum, but the choice is between 20,000 people being fired or a number much smaller than that." (AFA)/(KLM) is not involved. "Air France (AFA)/(KLM) is not currently in talks with Alitalia (ALI)," a spokesperson told "Dow Jones."

Air One (ADH) reaffirmed its intention to play a role in the rescue if the failing Italian flag carrier, while denying reports it also is in financial difficulty, according to "Reuters." "Ours is a solid company that is facing the difficulties in the sector with a rare vitality and reactive capacity," Chairman, Carlo Toto wrote in a letter to employees. "Despite investing a lot in growth, Air One (ADH) has a level of debt that is absolutely healthy and, contrary to as insidiously maintained by some, is in a large part guaranteed by the value of new airplanes in the fleet." Toto confirmed that "Air One (ADH) is willing to do its part in a re-launch of Alitalia (ALI)." Italian newspapers speculated on various scenarios, including a deal in which Alitalia (ALI) takes over Air One (ADH)'s key assets, such as its fleet and orders in exchange for an equity stake.

Air France (AFA)/(KLM), which bid unsuccessfully for Alitalia (ALI) in the spring, is willing to take a stake in an ongoing reorganization effort. "If it can be confirmed that the new company will be profitable, Air France (AFA)/(KLM) is ready to take out a minority stake in the new company's capital alongside the investors identified by the Intesa Sanpaolo bank," the group said. (AFA)/(KLM)'s interest coincided with Italian media reports that the government had amended its bankruptcy laws, paving the way for implementation of Intesa's rescue plan. The government's adviser reportedly is proposing to spin off (ALI)'s loss-making units and place them under bankruptcy protection and simultaneously create a new entity, dubbed Newco, for the airline. Sixteen Italian investors have indicated their willingness to inject up to €1 billion in Newco, which would combine a much smaller and restructured Alitalia (ALI) with privately held Air One (ADH), according to the reports. (ALI) management is scheduled to be briefed on the rescue plan.

September 2008: Lufthansa (DLH) is competing with Air France (AFA)/(KLM) to be a strategic partner with a reorganized Alitalia (ALI), whose board declared bankruptcy last month, the head of a key investor group told "La Republica." Roberto Colaninno, who reportedly leads the consortium of 16 Italians organized by Intesa Sanpaolo and prepared to invest €1 billion/$1.48 billion in the carrier, said, "We are negotiating with both, and they're going at the same speed . . . one of the two will do." (AFA)/(KLM) confirmed its interest in partnering with (ALI) last month. (DLH) did not comment. The (ALI) board released a statement saying it has "requested admission to the receivership procedure" outlined in last month's newly passed bankruptcy legislation and has "taken steps to file for insolvency at the Rome Court." The government named former Finance Minister, Augusto Fantozzi as (ALI)'s administrator, the "Associated Press" reported. According to "Agence France Presse," the new legislation allows bankrupt companies to speed up the selling of shares and employee reductions, while relaxing antitrust rules, which would allow Air One (ADH) to be combined into the new streamlined carrier. (ALI)'s loss-making components will be placed under bankruptcy protection and liquidated, according to reports.

Meanwhile, Intesa Sanpaolo (CEO), Corrado Passera told the (ANSA) news agency that the bank would take 10% of a restructured (ALI) with a €100 to €150 million investment.

(ALI) Extraordinary Administrator, Augusto Fantozzi gave the carrier's unions one week to agree on the government-led rescue plan. Italian Labor Minister Maurizio Sacconi told reporters that the plan calls for -3,250 layoffs. There are approximately 17,500 employed by (ALI) and likely partner Air One (ADH), the "Associated Press" reported.

The (ENAC) granted Alitalia (ALI) a 6-month provisional operating license ending March 1, 2009, following a meeting with (ALI)'s Extraordinary Administrator Augusto Fantozzi.

Later, The group of Italian investors including Air One (ADH) that reportedly had been willing to invest up to €1 billion/$1.4 billion in an Alitalia (ALI) restart, withdrew from negotiations with the carrier's labor unions Friday, leaving the troubled airline on the verge of collapse. Italian media reported that (ALI) Administrator, Augusto Fantozzi warned workers that there was no guarantee of flights because "no one will supply us with kerosene." Fantozzi told the labor groups that the carrier would be shut down if their talks with investment group (CAI) failed. (CAI) representatives said the unions did not appreciate the level of concessions necessary, but added that (CAI) was still open to the possibility of investing in an (ALI) rescue if workers reversed course and agreed to cuts.

Italian Prime Minister Silvio Berlusconi accused (ALI) labor groups of "unreasonable behavior." Industry Minister, Claudio Scajola added, "What's certain is that this is a failed company. Either a deal is reached [between unions and (CAI)] or all of the workers are laid off." Italian Prime Minister, Silvio Berlusconi pushed (ALI)'s labor unions to accept concessions proposed by Italian investment group (CAI), which is willing to spend €1 billion/$1.4 billion to rescue and re-launch the troubled airline. Speaking in Paris following a meeting with French President, Nicolas Sarkozy, Berlusconi said the Italian government is willing to extend "robust compensation" to 3,250 (ALI) employees, who would be laid off under the (CAI) rescue proposal, including 80% of the workers' base pay for 8 years. But he warned that if labor groups and (CAI) cannot reach agreement, -20,000 (ALI) workers will be out of jobs. "The government would not be able to guarantee [compensation] for 20,000 people," he said, adding that labor groups would be making a mistake to think the government's offer of compensation would apply if the carrier collapses. "There truly is no alternative" to the (CAI) plan, he said. "The alternative is [ALI's] failure."

(ALI) Administrator, Augusto Fantozzi told reporters that "there is little money" to keep the airline operating, adding, "It's about to run out." Berlusconi said he would be open to a rescued (ALI) merging with either Lufthansa (DLH) or Air France (AFA)/(KLM) in the future.

Alitalia (ALI)'s future was put in serious doubt after Italian investment group (CAI) withdrew its €1 billion/$1.4 billion offer to rescue the airline. "I received confirmation from (CAI) that it has withdrawn its offer," Prime Minister, Silvio Berlusconi told reporters. "We could be on the edge of an abyss." He previously had warned (ALI)'s workers that there was "no alternative" to (CAI)'s plan and all 20,000 employees would lose their jobs if talks between labor and the investment consortium collapsed.

6 of the carrier's 9 unions, including pilots (FC) and flight attendants (CA), refused to accept concessions contained in the (CAI) proposal. A deadline set by the consortium passed without labor groups' agreement to the rescue plan and (CAI) issued a statement saying its members had "unanimously" voted to withdraw their offer.

While the airline's airplanes were expected to continue flying, (ALI) Administrator, Augusto Fantozzi said that money needed to keep the airline operating was "about to run out."

Later, (ALI), described by Italian Prime Minister Silvio Berlusconi as being "on the edge of an abyss," gained new life when the airline's largest labor union reversed course and agreed to concessions contained in the rescue plan proposed by investment group (CAI), which now may include Air France (AFA)/(KLM). (CAI), the group of Italian investors, including Air One (ADH) that last week withdrew a €1 billion/$1.46 billion proposal to revive the failing carrier, said it was reviving its offer, following a change of course by (CGIL), which is (ALI)'s largest union and represents most of its ground workers. Meanwhile, civil aviation authority (ENAC) said it was satisfied that (ALI)'s rescue was on track and rescinded its threat to strip the airline of its operating license "for the time being."

Italian media reported that Air France (AFA)/(KLM) expressed an interest in taking a 10% to 25% stake. While there was no confirmation, Rome Mayor, Gianni Alemanno told reporters that (AFA)/( KLM) is re-involved.

(CGIL) dropped its prior opposition to the (CAI) deal and agreed to concessions, including >-3,000 job cuts. Flight attendants (CA) and pilots (FC) still had not agreed, but labor leaders representing the groups reportedly were in meetings in Berlusconi's office and are under pressure from (CGIL) and other (ALI) unions to sign on. (CGIL) head, Guglielmo Epifani indicated that the union had convinced (CAI) to sweeten its offer in terms of worker benefits, saying at a news conference that the new deal is an "absolutely positive comprehensive agreement. I'm confident that with the gains we won, it will be possible for those who have not yet subscribed to the accord, to reconsider and contribute to the re-launching of the company."

Alitalia (ALI)'s pilots (FC) and flight attendants (CA) still have not signed on to the revived (ALI) rescue plan backed by the airline's other major unions, stalling its re-launch even as Lufthansa (DLH) became a possible investor. Italian investment group (CAI) is offering €1 billion/$1.46 billion to save the troubled carrier and recently gained backing from (CGIL), (ALI)'s largest union representing most of its ground workers. (CAI) is hopeful that pilots (FC) and flight attendants (CA) will join (CGIL) in agreeing to concessions contained in the rescue plan.

Meanwhile, Lufthansa (DLH) (CEO) Wolfgang Mayrhuber accepted an invitation from the Italian government and traveled to Rome Friday to join in talks with (CAI) and unions. Previously, it was reported that Air France (AFA)/(KLM) was considering a 10% to 25% stake, but (DLH) may be interested in outbidding its rival and taking an even larger stake, according to several European media reports. (DLH) did not comment but did confirm that Mayrhuber had gone to Rome.

Italian Transport Minister Altero Matteoli encouraged pilots (FC) and flight attendants (CA) to back the rescue plan. "At this point, there are no other offers and (CAI) is Alitalia (ALI)'s salvation," he told reporters. "Failure to seize this occasion would be a very big mistake." It is believed that major involvement by (AFA)/(KLM) or (DLH) would make the reluctant unions more comfortable with backing the (CAI) proposal.

Alitalia (ALI)'s rescue by Italian investment group (CAI) appears fully on track after the last of (ALI)'s 9 labor unions backed the €1 billion/$1.46 billion plan to re-launch the troubled airline that is estimated to be losing €3 million daily. After weeks of contentious negotiations between the unions and (CAI), which includes Air One (ADH), labor groups agreed to concessions that will include 3,000 of (ALI)'s 20,000 workers losing their jobs. "We've signed the deal, but there's nothing to celebrate," said Antonio Divietri, head of AVIA, a union representing a majority of flight attendants (CA) that was the last holdout. He told reporters that under the rescue plan (ALI) workers are "like a dog [left out] on a balcony."

Under the (CAI) plan, (ALI)'s core passenger operations, likely to be downsized, will be merged with Air One (ADH). Ancillary services and assets will be sold off or shut down.

The next step is whether a foreign investor will take a stake in the new (ALI). Both Air France (AFA)/(KLM) and Lufthansa (DLH) have indicated an interest, and (DLH) (CEO) Wolfgang Mayrhuber traveled to Rome for talks. "It's up to (CAI) to [determine] the best offer for our country, but it must be a minority," Industry Minister, Claudio Scajola said. Prime Minister, Silvio Berlusconi said over the weekend that he would "rule out foreign investors or companies taking a majority stake" in (ALI), scuttling speculation that (AFA)/(KLM) or (DLH) would attempt an outright takeover. Any stake taken by the European heavyweights would be subject to (EU) approval.

October 2008: Alitalia (ALI) flew 2.58 billion (RPK)s traffic in September, down -25% from the year-ago month. Capacity dropped -17.6% to 3.66 billion (ASK)s and load factor was down -7 points to 70.5% LF.

The Italian Civil Aviation Authority issued a provisional air operating certificate (AOC) to Alitalia (ALI), valid until March 1, both (ENAC) and (ALI) confirmed. The license is conditional on a monthly check of the carrier's economic and financial situation.

Alitalia (ALI) Extraordinary Administrator, Augusto Fantozzi said he received several expressions of interest for acquisition of the group's assets and activities. The deadline for offers was September 30. Fantozzi said only one proposal directly concerned air transport activities, whereas the other expressions of interest were for specific branches and/or activities of various companies comprising the Alitalia (ALI) Group. "The financial advisor for the procedure has started analyzing the expressions of interest received. Once the analysis has been completed, the proposers who meet the conditions for initiating negotiations, will undergo due diligence examination," his statement said.

Meanwhile, Ryanair (RYR) submitted a formal complaint to the European Commission (EC) concerning the Italian government's rescue deal for (ALI), calling it "the latest and perhaps most blatant example" of state aid and "the second time that they have used the trick of simply shifting debt out of the airline and into a subsidiary in order to keep the airline afloat." (RYR) Director Legal & Regulatory Affairs, Jim Callaghan claimed the Italian government is writing off up to €2 billion in (ALI) debt and is "guaranteeing the investments by the members of the consortium and underwriting huge concessions to the unions in exchange for their agreement to these ludicrous plans." (RYR) said it would appeal the (EC)'s likely approval of the (ALI) rescue to the European court system.

British Airways (BAB) (CEO) Willie Walsh said competing with Lufthansa (DLH) and Air France (AFA)/(KLM) for a minority stake in Alitalia (ALI) "is certainly possible if the (CAI) investor group restructuring really succeeds," Frankfurter Allgemeine Zeitung reported.

Compagnia Aerea Italiana (CIA), the consortium attempting to purchase and revive Alitalia (ALI), agreed to inject €1.1 billion/$1.37 billion into the holding company established to purchase the airline, according to a statement cited by widespread press reports. (CAI) reportedly must present its binding bid, although it continues to negotiate contract terms with unions and said it required approval from both labor and European authorities before making its offer.

November 2008: Compagnia Area Italiana (CAI) presented its binding offer for Alitalia (ALI), despite the continuing protest of unions representing pilots (FC) and flight attendants (CA). (ALI), operating under administration, said the bid is "unique, inseparable and irrevocable" until November 30 and is conditional upon European Commission (EC) approval of the Italian government's emergency loan and antitrust approval. (CAI) is confident it can re-launch Alitalia (ALI) on December 1 with labor onboard; (CEO), Rocco Sabelli told "La Republica" that he is "convinced that in the end we will embark on this adventure of re-launching Alitalia (ALI) with them." The group's net debt as of September 30 was €1.2 billion, narrowed -3.8% from the prior month.

Compagnia Aerea Italia (CAI)'s binding offer for Alitalia (ALI) is worth €1 billion/$1.29 billion, the airline said in a statement to the country's stock market regulator, and comprises €900 million for (ALI)'s flight operation, assets and contracts, €57 million for Alitalia (ALI) Servizi, €7 million for Alitalia (ALI) Airport, €19 million for Alitalia (ALI) Express and €17 million for low-cost subsidiary Volare (VLR). The €900 million for (ALI) comprises €275 million cash and €625 million to assume the carrier's debts. The first cash payment of €100 million will be made at closing of the acquisition November 30. For (ALI), Express and Volare (VLR), the balance will be paid in two equal parts within 180 days and 24 months after closing. For Servizi and Airport, the balance will be paid within 180 days of closing. (CAI)'s offer still lacks support from unions representing (ALI) pilots (FC) and cabin staff (CA).

Alitalia (ALI) must pay back the €300 million emergency loan from the Italian government, which the European Commission (EC) called "unlawful aid and incompatible with the common market." The (EC) ruled that Italy "has to take the necessary action to recover" the money. The bridge loan was granted in April to keep (ALI) afloat. (EC) VP Transport, Antonio Tajani said the money must come from the airline and not Compagnia Aerea Italiana (CAI), the investor group that has bid for the ailing carrier, according to press reports. "The (EC) notes that there is no continuity between Alitalia (ALI) and (CAI)," the (EC) confirmed. However, the (EC) was supportive of (CAI)'s €1 billion bid, the fate of which remains unclear following the ruling on the loan and the lack of support of all of Alitalia (ALI)'s unions, several of which continued to stage wildcat strikes. (ALI) had to cancel 124 flights.

The (EC) gave Italy the "go-ahead" to sell (ALI)'s assets and said it will appoint a "monitoring trustee" this week to ensure "that transactions will be made at market prices." It said (CAI) offered the best bid and "will conduct its passenger air transport activity on the basis of its own business plan, which has been drawn up with specific operational targets in terms of fleet management, personnel and flight times and on market terms." (CAI) plans to carry 69% of the passengers currently flying with (ALI), the (EC) said.

Italian Prime Minister, Silvio Berlusconi said he "spoke about Alitalia (ALI)" with German Chancellor, Angela Merkel in Trieste and claimed they "very much agree in looking with favor on the possibility of collaboration between Alitalia (ALI) and Lufthansa (DLH), and we hope it will happen," the "Associated Press" reported. (ALI) reportedly is cancelling up to 100 flights per day, as wildcat strikes continue in protest of Compagnia Aerea Italia (CAI)'s €1 billion/$1.25 billion takeover. The extent of a potential (ALI)/(DLH) cooperation was not revealed, but reports suggest (CAI) intends to invite either (DLH) or Air France (AFA)/(KLM) to invest in up to 20% of the re-launched airline.

Air France (AFA)/(KLM) remains interested in acquiring 20% to 25% in the new Alitalia (ALI) as well as the Austrian government's 41.6% stake in Austrian Airlines (AUL) Group (AAG), Chairman & (CEO), Jean-Cyril Spinetta confirmed. "We would be willing to invest about €200 million/$253.8 million [in Alitalia (ALI)] through a capital increase," he said. The Compagnia Aerea Italia (CAI) investor group, which was cleared by the Italian government to take over (ALI) for €1.05 billion, has not announced its choice of international partner. The new airline, which will incorporate Air One (ADH), reportedly may be ready to commence operations as early as December 1. "Everything is still very imprecise," Spinetta said, noting that "negotiations have not yet started. But yes, I meet regularly with (CAI) and [head] Roberto Colaninno, and I'm sure they do meet with others too."

Both Lufthansa (DLH) and British Airways (BAB) have expressed their interest. Alitalia (ALI) said it is reducing domestic and short-haul international flying, citing ongoing labor unrest as well as administrative issues related to the transfer to (CAI). Employees must be placed on unemployment before being rehired by (CAI). (ALI) said its intercontinental flight schedule will be "nearly unchanged." It did not specify how many flights will be cancelled. The (ALI) unions that have not accepted either new work conditions offered by (CAI) or redundancy payments, agreed to postpone a strike.

Meanwhile, Spinetta also conceded he was "a bit surprised" by reports that Lufthansa (DLH) asked the Austrian government to assume €500 million of (AAG)'s debt as part of its takeover proposal. The state holding company (OIAG) stated it will negotiate exclusively with (DLH). "Legal conditions were apparently changed," Spinetta said. "I informed the Austrian government that if a new bid would be launched, we would consider participating." He said that a legal challenge would be "an option" if Austria assumes the debt. (OIAG) defended its position, saying that (AFA)/(KLM) never made a formal offer as (DLH) did, sending only two letters regarding its interest in the stake, the "Financial Times Deutschland" reported.

December 2008: Compagnia Aerea Italia (CAI)'s purchase and relaunch of Alitalia (ALI) received final approval by the Italian and European competition authorities, with the former stipulating that at least 10% of seats on each flight be available at the "cheapest price." Those fares would be based on the lowest prices offered by (ALI) and Air One (ADH) in the previous travel season. The Italian authorities also reserved the right to issue an additional ruling, once (CAI) chooses either Lufthansa (DLH) or Air France (AFA)/(KLM) as its foreign investor. The European Commission (EC) confirmed that an independent report indicated that (CAI)'s €1.05 billion/$1.33 billion acquisition of (ALI)'s assets occurred at market prices. It is set to take over officially on December 12.

(CAI) investor group officially took control of (ALI)'s flight assets, hours after two flight attendant (CA) unions reportedly agreed to back the deal and one day after buying Air One (ADH). The deals are worth a combined €1.05 billion and the restructured airline is scheduled to relaunch January 12. (CAI) reportedly still plans to choose a foreign partner and, according to (CEO) Rocco Sabelli, is targeting a breakeven result in 2010, the "Associated Press" reported. The new (ALI) will operate 148 airplanes to 70 destinations.

Safair (SFA) has taken delivery of 23 ex-Alitalia (ALI) MD-82s owned by parent AerGo Capital (CLJ). 4 flown to (SFA)'s maintenance facility at Johannesburg, with the remainder stored at Upington Airport, until hangar space becomes available. MD-82's to be used for business opportunities in the Sub Sahara region. At least 2 will go to 1Time (1TA).

January 2009: Air France (AFA)/(KLM appears to be on the verge of being named a minority partner in the reorganized Alitalia (ALI), beating out Lufthansa (DLH) for the right to purchase a 20% to 25% stake, according to widespread press reports from Italy. Investor group Compagnia Aerea Italia (CAI) met with Italian Prime Minister, Silvio Berlusconi yesterday and "explained their preference for (AFA)/(KLM) and were told there were no objections from the government," a (CAI) source told "Reuters" in Rome. Berlusconi told reporters that "(DLH) has never been present, neither physically nor with an offer."

Later, (DLH) confirmed that it did not make an offer for (ALI). A (DLH) spokesperson told both Germany's "dpa news" agency and "Reuters" that the airline preferred to cooperate with its Star Alliance (SAL) partners in the Italian market. In November, (DLH) announced the launch of an Italian subsidiary based at Milan Malpensa.

Meanwhile, the European Low Fares Airline Association (ELFAA) submitted a formal complaint to the European Commission (EC) citing unlawful state aid to (ALI) and its successor/acquirer (CAI) arising from last August's so called "decreto Salvalitalia" ("Save Alitalia" Decree), which has imposed a €3/$4.07 per passenger airport tax since October 28 to help finance (ALI)'s obligation to provide redundancy benefits and lower social security costs for (CAI) when it rehires (ALI) employees.

The (ELFAA) estimates that (CAI)/(ALI) will benefit from roughly €100 million per year on average in state aid through changes to the social security system prompted by the decree. "(ELFAA) is today calling on the (EC) to put an end to this scandalous state aid," Secretary General, John Hanlon said. "This time not only the taxpayer but also the competition pays," he added. The tax will raise approximately €210 million per year by levying €3 on each of the 70 million passengers departing from Italian airports. According to (ELFAA), its members will account for approximately 15 million departing passengers in 2009, thus incurring a cost of €45 million.

Later, as was widely expected, (AFA)/(KLM) will become the relaunched (Ali)'s international partner and will take a 25% stake in the restructured carrier through a capital increase of approximately €323 million/$435.1 million. The decision ends months of speculation and uncertainty and came on the last day of the flag carrier's operation as the "old" (ALI). The (AFA)/(KLM) board approved the investment.
"In view of the many challenges facing our sector, strengthened cooperation is more than ever a necessity between carriers and we have now made a further step towards this," (AFA)/(KLM) Chairman, Jean-Cyril Spinetta and (CEO), Pierre-Henri Gourgeon said in a statement. The Franco-Dutch group will hold 3 of 19 seats on (ALI)'s board, including 2 of the 9 comprising the executive committee. The agreement includes a 4-year lock-up period but allows (AFA)/(KLM) to increase its holding and make an offer for a controlling stake in 2013. The lock-up will cease to apply only in the case of a stock market quotation starting in the 3rd year.

(AFA)/(KLM) presented the "best solution" compared to alternatives offered by Lufthansa (DLH) and British Airways (BAB), (ALI) (CEO), Rocco Sabelli said, noting that (DLH) "showed interest in the Italian market but never in a concrete project for a new (ALI)," while (BAB) never wanted to make a "real investment." (AFA)/(KLM) was regarded by most as the natural choice, owing to both its membership in SkyTeam (STM) and its antitrust immunity with (ALI) on transatlantic routes. The carriers have partnered on joint venture on routes between France and Italy since 2002. In 2007, (AFA)/(KLM) won a bid for the Italian government's 49.5% stake in (ALI) but was rebuffed by incoming Prime Minister, Silvio Berlusconi.

(AFA)/(KLM) said the partnership will be based on a multi-hub strategy in which Paris Charles de Gaulle, Amsterdam Schiphol, Rome Fiumicino (FCO) and Milan Malpensa will feature "on an equal basis." Synergies derived mainly from network optimization and revenue management will be achieved over the next three years and should amount to some €720 million for (ALI) and around €90 million for (AFA)/(KLM) by either the 2nd or 3rd year.

The entire arrangement is subject to approval by (ALI) shareholders and (EU) competition authorities. The latter are expected to clear the deal by the end of the current quarter, (AFA)/(KLM) said.

January 12 was the old (ALI)'s last day of existence. At 10 pm, all assets were transferred to (CAI). The "new" (ALI) will carry the same name and logo and is essentially a merger of the slimmed-down (ALI) with smaller rival Air One (ADH), which was a (DLH) partner. The new airline will operate 148 airplanes to 70 destinations, including 13 international airports. The first "new" flight was scheduled to depart at 6 am from London Heathrow to (FCO). SEE ATTACHED - - "ALI-NEWS-JAN09/-A."

The new (ALI) faced problems common for its predecessor on its first day of operations as workers staged protests at Rome Fiumicino, Milan Malpensa and Linate, causing some flight cancellations and delays. "I don't have any illusions," (ALI) (CEO), Rocco Sabelli told "La Stampa," noting that (ALI) had drawn up an emergency plan for the protests. "There are problems to be resolved, and there will be plenty more to resolve."

March 2009: Alitalia (ALI) (CEO) Rocco Sabelli said the restructured carrier expects to lose €200 million/$251.8 million this year, "Reuters" reported. "We had a terrible 1st t3 to 4 weeks" following the January re-launch he said. "After those terrible 3 weeks we began to do better even if we're not filling the airplanes as much as we would like."

Later, Air France (AFA)/(KLM) announced that it completed the acquisition of a 25% stake in Alitalia (ALI) through a reserved share subscription worth approximately €323 million/$439.1 million. Its partnership with the restructured Italian carrier was announced in January but required approval from competition authorities. At that time, (ALI) said (AFA)/(KLM) would be entitled to nominate three of the 19 members of the board and two members of the executive committee. (AFA)/(KLM) said that the stake grants it "greater access to the Italian market thanks to (ALI) which, following its acquisition of Air One (ADH), has reinforced its position on the domestic market."

A320-216 (3815, EI-DTB), Aircraft Purchase Fleet leased.

April 2009: Alitalia (ALI) launched daily flights from Milan Linate to Paris Orly, Bucharest and Warsaw and 3x-weekly, Milan Malpensa -St Petersburg service as it opened its summer schedule. (Ali) will serve 25 domestic and 49 international destinations with 2,549 weekly flights this summer.

2 A320-216s (3831, EI-DTC; 3846, EI-DTD), Aircraft Purchase Fleet leased.

May 2009: Alitalia (ALI) Chairman Roberto Colaninno told "La Republica" that load factors have climbed to 65% LF - 66% LF from 43% LF in January, according to "Reuters." He said breakeven load factor is 67% LF - 68% LF and that (ALI)'s market share in Italy has risen from January's 54% LF to 61% LF - 62% LF.

(CEO)s of the Air France (AFA)/(KLM) Group and Delta Air Lines (DAL) signed a profit/loss-sharing joint venture (JV) agreement in Paris covering a wide network around 10 hubs representing >200 flights and approximately 50,000 seats per day. The airlines said their (JV), which will concentrate on service to/from Amsterdam, Atlanta, Detroit, Minneapolis, New York (JFK) and Paris Charles de Gaulle as well as Cincinnati, Lyon, Memphis and Salt Lake City, represents about 25% of the industry's total transatlantic capacity.

"This strategic partnership puts us in a good position compared with other major alliances, which are extremely active on the world's leading long-haul market, "(AFA)/(KLM) President & (CEO) Pierre-Henri Gourgeon said at the Paris news conference, stressing that by "optimizing the use of our pooled resources, this joint venture will help us weather the current economic situation and protect our product offering." The (JV) is expected to generate annual revenue of >$12 billion based on 2008 - 2009 data and $150 million in synergies for each of the 2 groups by the 2nd year.

It covers routes between North America and Europe as well as between Europe and South America and between the USA and Africa and the Middle East. On all routes between North America and Europe, between Amsterdam and India, and between North America and Tahiti, (AFA), (KLM) and (DAL) will "consensually" share capacity, revenue, costs and profits/losses. The deal can be cancelled only with a 3-year notice after an initial 10-year term.

The (JV) effectively replaces two existing agreements, the one between (AFA) and (DAL) signed in 2007, and the one between (KLM) and Northwest Airlines (NWA), now part of Delta (DAL), signed in 1997. The (KLM)-(NWA) deal was the first transatlantic (JV) between two carriers. "We know from experience that the success of a (JV) calls for shared vision and long-term commitment, the simplest of operating rules and fair sharing of revenues and costs," (KLM) President & (CEO) Peter Hartman emphasized. The (JV) will not lead to the creation of a subsidiary, he said.

The (USA) Department of Transportation granted the SkyTeam (STM) partners expanded antitrust immunity last year and "other competition authorities have received the same information" as USA regulators, Gourgeon said, adding that he is not worried the deal will be blocked by the European Commission (EC). Alitalia (ALI) is interested in joining but first must receive anti-trust immunity (ATI), he said. (ALI) was included in the (STM) (ATI) but went bankrupt soon after. (ATI) cannot be transferred from a bankrupt company to a new company.

Gourgeon insisted the agreement is not a virtual merger or a prelude to an equity swap and noted that in the current environment, he prefers to preserve the group's cash position. (DAL) (CEO) and former Northwest (NWA) (CEO) Richard Anderson added, "What we discovered over the years is that there is no need to make an equity investment because we can obtain all the benefits without doing so."

(ALI) has been re-established as an (IATA) (ITA) member and said it is "now in a position to play an active role in all the association's projects, confirming its intention to be a key player in the air transport world, at the same time as following an investment strategy to continuously improve its services and products."

2 A320-216s (3885, EI-DTW; 3906, EI-DTF), Aircraft Purchase Fleet leased.

June 2009: Alitalia (ALI) received a 5th new A320, part of a major fleet renewal comprising 90 new A320s by 2013 and 14 A330s. It will take delivery of a further 9 A320s by the year end. All seats on the new A320 fleet are equipped with (LCD) screens and (ALI) is replacing seats on its existing Airbus (EDS) fleet. Its fleet currently comprises 153 airplanes, 135 used for short/medium haul and 18 on long-haul flights.

July 2009: Alitalia (ALI) released select financial and operating data for the period from January 13, when it re-launched under new ownership as a merged company with Air One (ADH), to June 30. It posted an operating loss of -€273 million/-$385.5 million, comprising a -€210 million 1st-quarter loss and a -€63 million 2nd-quarter deficit. Revenue was €1.3 billion over the six-month period and (ALI) carried 10 million passengers at a load factor of 59% LF (51% LF in the first quarter, 65% LF in the second). "The results although slightly lower than forecast, are actually better than expected, considering the actual critical scenario which has affected the aviation sector on a global scale," Chairman Roberto Colaninno said.

(ALI) expects further improvement in the current quarter. (ALI) will transport around 2.2 million passengers this month with load factor averaging 72% LF. It canceled fewer than 1% of its scheduled flights in the 2nd quarter, although a "general scenario of poor punctuality remains on the whole network. In the 1st semester, the average performance was slightly >70%, still far from the company goal of 80%." Most of the problems are at Rome Fiumicino (FCO). It said it launched "an important" effort to integrate and renew (FCO) operations logistics, processes and systems in order to improve the situation. (ALI) plans to introduce 75 new Airbus (EDS) airplanes by the end of 2013, with 6 A320s already delivered this year. It said its partnership with Air France (AFA)/(KLM) is "positive" and that it expects to break even within 3 years.

2 767-33AERs (27908; 28147), sold to Omni Air (OAE). A320-216 (3921, EI-DTG), Aircraft Purchase Fleet leased.

September 2009: Alitalia (ALI) has sufficient funds to support its operations through next year and does not need new capital, (CEO), Rocco Sabelli told a parliamentary transport committee. "(ALI) has been stabilized. It has moved from the recovery room to another room where it will complete its rehabilitation," Chairman Roberto Colaninno said, according to "Dow Jones." Sabelli reportedly said that (ALI) is focused on shoring up its Rome Fiumicino operation and solidifying its position at secondary and tertiary airports where Low Cost Carriers (LCC)s have eaten into its market share.

3 A320-216s (3956, EI-DTH; 3976, EI-DTI; 3978, EI-DTJ), Aircraft Purchase Fleet leased.

October 2009: Alitalia (ALI) will commence 4 routes from Turin in December: 4x-weekly to Amsterdam, and 2x-weekly to Berlin Tegel, Moscow Sheremetyevo, and Istanbul Ataturk. (ALI) will add another weekly frequency to each route in mid-January.

November 2009: Alitalia (ALI) reported a +€15 million/+$22.3 million operating profit in the 3rd quarter, its 1st since the mid-January re-launch under new ownership with backing from Air France (AFA)/(KLM). The surplus followed a -€210 million operating loss in the 1st quarter and a -€63 million deficit in the 2nd, leaving (ALI) -€258 million in the red on an operating level since the takeover by the Compagnia Aerea Alitalia consortium.

"Managing to exceed the forecast of an even balance for the 3rd quarter represents a significant outcome for us," (CEO) Rocco Sabelli said, while Chairman Robert Colaninno said the result "proves the validity of the industrial operation and of the investment made by the stockholders. The challenges that lie ahead are again many and complex, but today we know that we have the means to face them."

3rd-quarter revenue was €838 million. (ALI) transported 6.3 million passengers and load factor was 74% LF, up +9 points from the 2nd quarter and +23 from the 1st. It said market share as of September 30 was 53% domestic and 20% international. 9-month revenue came to €2.12 billion and (ALI) had financial debt of €831 million as the 3rd quarter ended.

(ALI) took delivery of 4 A320s during the quarter and has added 9 this year. 4 MD-80s left the fleet. It said it also has launched the "purchasing procedure" for 4 90-seat regional jets. It currently operates 148 airplanes, according to its website.

December 2009: Aeroflot (ARO) and Alitalia (ALI) signed a Memo of Understanding (MOU) "to further develop new routes and frequencies between Italy and Russia as well as implement a wide ranging reciprocal code share to domestic and beyond destinations," (ALI) announced. The carriers also will cooperate more closely on network planning, reservations, sales and marketing, passenger service, charter and cargo operations and technology. (ALI) and (ARO) already code share on flights to/from Moscow Sheremetyevo and 4 Italian destinations.

February 2010: The Alitalia Group intends to strengthen its position at both Milan Linate and Milan Malpensa (MXP) with a 3-year development plan calling for a "dual-brand and customer hub model" at (MXP), including a repositioning of Air One (ADH) as a "Smart Carrier" offering low fares on short-/medium-haul routes while reinforcing the Alitalia (ALI) brand and offering on intercontinental flights.

(ALI) will base 2 new A330s featuring its new business class (C) at (MXP) and launch flights to Miami in June, adding to its current 5 intercontinental destinations.

The 3-year plan confirms the group's intention "to maintain its dominant position in the Milan market with new offerings, articulated on the basis of different demand profiles and strongly oriented towards growth," it said. The company is aiming to grow passenger traffic at both Milan airports from 6.9 million in 2009, to 9 million in 2012, and increase the number of destinations from 39 to 47.

At Milan Linate, it foresees a +11% rise in passengers to 6 million in 2012 and at (MXP) it plans to double passengers to 3 million in 2012, with 20% of that growth this year. Destinations will lift from 20 to 32 and the number of flights will increase nearly +50% from 16,770 in 2009 to almost 25,000 in 2012.

From (MXP), the group "will offer a thoroughly renewed product, tailored both to the business (C) and leisure passenger, according to a dual brand and customer hub model, with the possibility for the customer to create, within the same airport, the ideal combination of flights, fares and connections." It added that the approach will start March 28 with "inauguration of the new Smart Carrier Air One (ADH) flights from the (MXP) hub to 14 destinations in Italy and the Mediterranean basin." In 2011, (ADH) plans to start service to 10 new international destinations including Munich, Warsaw, Budapest, Istanbul, and Sofia.

While Air One (ADH) will offer flights at "particularly advantageous fares" starting at €25/$34.30 to domestic destinations and €70 for international, passengers "will not have to forgo the advantages offered by traditional companies," it said. (ALI) emphasized that "differently from low-cost companies, (ADH) will in fact provide, without additional cost, seating assignment, baggage transport, MilleMiglia miles and airport check-in." Its new business model from (MXP) also will allow passengers to buy tickets both directly through the Internet or dedicated call centers and indirectly through travel agencies.

(ALI) is again expanding its network and is planning to replace its remaining 6 767-300ERs by 4 new A330-200s from the original Air One (ADH) order and 2 leased 777-200ERs over the course of the next 2 years:
Milan Linate - Crotone: daily CRJ-900 service has started on December 7 (operated by Air One (ADH) CityLiner;
Milan Malpensa - Miami: 3x-weekly 767-300ER service starting on June 3;
Rome Fiumicino - Crotone: 2x-daily CRJ-900 service has started on December 7 (operated by Air One (ADH) CityLiner);
Rome Fiumicino - Los Angeles: 5x-weekly 777-200ER service resuming on June 5;
Rome Fiumicino - Malaga: daily A320-200 service resuming on March 28;
Rome Fiumicino - Vienna: 2x-daily CRJ-900 service resuming on March 28 (operated by Air One (ADH) CityLiner);
(ALI) will however give up its Milan Malpensa - Sao Paulo Guarulhos route on March 27 in favour of a frequency increase on the Rome Fiumicino - Sao Paulo Guarulhos route that will now be operated daily. It has replaced the ARJ-70 wet-leased from Transwede Airways by Cityjet ARJ-85s on its 2x-daily, Milan Linate - London City route now operated in code share with Air France (AFA).

(ALI) and Baboo have signed a bilateral code share agreement covering all flights operated between Geneva and Italy by the 2 carriers and the Baboo routes from Marseilles to Milan Malpensa and from Nice to Venice Marco Polo.

March 2010: Alitalia (ALI) will increase summer capacity by +5.5% year-over-year and will operate some 2,500 weekly flights on 140 routes to 82 destinations on its summer schedule beginning March 28. 3x-weekly, Milan Malpensa (MXP) - Miami service will launch June 3 and 5x-weekly, Rome Fiumicino (FCO) - Los Angeles flights begin June 5. (ALI) also will launch new service from (FCO) to Malaga (daily) and Vienna (2x-daily) on March 28 and will resume seasonal flights from (FCO) and Milan Linate to Lampedusa and Pantelleria as well as its 4x-weekly Venice - Cagliari service. (ALI)'s Air One (ADH) subsidiary will begin operating from (MXP) to Trapani, Alghero, Olbia, Palma, and Ibiza. Air One (ADH) will operate 5 A320s out of (MXP) on 200 - 250 weekly flights. (ADH) expects to take delivery of 10 A320s and 2 A330s in 2010.

3 A320-216s (4075, EI-DTK; 4143, EI-DTN; 4152, EI-DTO), deliveries.

April 2010: A320-216s (4108, EI-DTL; 4119, EI-DTM), deliveries.

June 2010: Alitalia (ALI) launched 4x-weekly, Rome Fiumicino - Amman service aboard an A320. (ALI) is adding capacity (ASK)s at Alghero (where Ryanair (RYR) is closing seven routes).

(ALI) said it cancelled 74 flights (48 international, 26 domestic) due to a one-day cabin staff (CA) strike, "Reuters" reported. The dispute reportedly centers on (ALI)'s plans to acquire Volare (VLR).

July 2010: Alitalia (ALI) introduced its 1st new A330-200 at Milan Malpensa, the first of two of the long-haul aircraft scheduled to be added to (ALI)'s fleet this summer. It is configured for 230 passengers in a 3-class layout and is the 1st to feature (ALI)'s new Classica Plus premium economy cabin and renewed Magnifica business class (C). The A330 will be used on seasonal summer service from Malpensa on Alitalia (ALI)'s network of transatlantic routes. (ALI) added 2 A320s to its fleet earlier this month for a total of 44 of the type and 160 total airplanes. "A reconfiguration program of the 777 fleet is also planned which will lead a harmonization of the entire (ALI) intercontinental fleet."

August 2010: Alitalia (ALI), finally on a track to recovery, is still far from profitability, while its European competitors race ahead posting profits. (ALI) is still deeply in the red, posting a first-half operating loss of -€129 million/-$169.2 million, down sharply from the -€273 million lost in the same 2009 period. Net loss was -€164 million, bettering last year's -€324 million deficit. The improvement might have been greater had it not been for higher fuel prices, increased labor costs and the volcanic ash service reductions that hit the bottom line this year. Revenues totaled €1.5 billion, up +13%. (CEO) Rocco Sabelli said the second quarter saw a real positive performance, with almost no losses. Alitalia (ALI) is benefiting from both the worldwide traffic recovery and its own efficiencies. (ALI) is not expected to move back into the black before 2012, and projects neutral operating results in 2011. The question is whether the airline can survive the rate at which it is burning money. Its debts, as of June 30, stand at €783 million, while total cash availability, including unused credit lines, total €490 million.

The summer peak season will bring more traffic, revenues and probably
positive operating and net results, but the problems will come back during the fall and winter. Management could ask shareholders for a cash infusion, and the summer results will indicate whether this will be necessary.

Moderate optimism is justified by the traffic results: (ALI) carried 10.6 million passengers in the 1st 6 months, up +3% overall. Perhaps what is most important is the increase in international and intercontinental passengers, up +7.6% and +22.9%, respectively. Domestic traffic is pressured by competition from high-speed trains on the former Milan - Rome "golden route." (ALI) also achieved a much better load factor, now at 68% LF, compared with 58.7% LF, and improved on-time performance to 91.2% from 71.6%. But the load factor on domestic flights is still at 58.4% LF, again a sign of the train competition.

(ALI) also continues to invest in fleet renewal and modernization. It has spent nearly €20 million to modernize the cabins of the 46 Airbus (EDS) airplanes it inherited from the old Alitalia (ALI), while growing its fleet to 156 airplanes, including 5 A320s received in the 1st 6 months. It also took delivery of 2 A330s and 2 A320s in July. (ALI) is slowing down, in some cases by several months, the delivery schedule of the Airbus (EDS) (airplanes it has on order to ease its financial costs while traffic recovers. (ALI) is set by year-end to select a new regional jet to replace its Embraer RJs and possibly some MD-80s. The official requirement is for 17 to 20 airplanes, but that could grow to 27 to 30. The main candidates are Bombardier (BMB) and Sukhoi (SSJ).

(ALI) also could experience an unusual situation this summer—a peak
season without a major strike. This is the result of a preemptive agreement, signed by all its major unions, which calls not only for the hiring of 100 full-time flight attendants (CA) in addition to the 550 seasonal ones, but also for establishing secondary operating bases in Turin, Milan, Venice, and Catania. The accord includes financial incentives for pilots (FC) and flight attendants (CA). The airline in return will be able to move cabin (CA) and flight deck (FC) personnel around the system as needed to be more efficient, which could also improve its on-time performance.

September 2010: Alitalia (ALI) will launch 3x-weekly, Rome Fiumicino – Rio de Janeiro service on June 4, 2011, increasing to 4x-weekly service from July 2011.

October 2010: Alitalia (ALI) and Jet Airways (JPL) signed a Memo of Understanding (MOU) to code share on seasonal winter flights to Italian and Indian destinations. (JPL) will launch daily, Milan Malpensa – New Delhi service on December 5.

Embraer and Air France Industries (AFI) signed a 5-year Flight Hour Pool Program contract with Alitalia (ALI) to support (ALI)’s fleet of 6 Embraer E170s.

November 2010: Alitalia (ALI) posted a +€39 million/+$54.4 million net profit for the third quarter, significantly widened from the +€1 million profit in the year-ago period. (EBIT) rose year-on-year from €15 million to €56 million and revenue increased +15% to €971 million.

(ALI) said the recovery in demand from the intercontinental and international market continued while domestic demand started to show some growth. It carried 7.1 million passengers during the three months, up +11% on a year earlier, with enplanements on intercontinental routes increasing by +8.3%, +13.8% on international routes and +10.3% on domestic routes. It claims it increased its domestic market share to 53%. The load factor was 76% LF, up +1.7 points on the year-ago period.

For the nine months ending September 30, (ALI) remained in the red with a -€125 million deficit. This compares to a net loss of -€323 million in the year-ago period. Operating loss came in at -€73 million, a marked improvement on the -€258 million negative (EBIT) posted in the year-ago period. Revenue was up +15.1% to €2.46 billion and passengers carried rose +6.2% to 17.7 million. (ALI), in which the Air France (AFA)/(KLM) Group holds 25%, noted that the “significant improvement” of financial results versus last year was achieved despite the negative effects of exchange rates, increase in fuel costs, and reduction in “contributory benefits” which pushed costs up by some +€150 million on last year. (ALI) was upbeat on its full-year outlook, and said that “given the positive trend in sales and income, Alitalia (ALI)’s year-end results are forecast to be better than expected and the operating break-even target to be reached in 2011 is confirmed.”

December 2010: Alitalia (ALI) has opted to buy Embraer regional jets in the competition to modernize and consolidate (ALI)'s regional jet fleet, industry officials say. (ALI)’s board of directors has authorized management to sign a preliminary agreement covering the lease of a combination of 14 Embraer E170 and E190 regional jets. (ALI) already operates 6 E170s, which 1st entered the fleet in 2004 and appears to have bolstered the aircraft maker’s position in competition over Bombardier and Sukhoi since (ALI) has
a medium-term target to grow its fleet to 20 airplanes. Later
expansion to 27 units is possible.

The 10 Bombardier CRJ-900s also currently in service at (ALI) are to be gradually retired as the new E-Jets arrive. According to industrial sources, the (ALI)’s management rated the Embraer (EMB) proposal as the best one, with the Sukhoi Superjet 100 coming second. The Russian bid came with aggressive financial terms to secure (ALI) as the first big name European costumer. But management shied away in part because the Superjet 100 remains to be certified; Embraer also benefited from the positive experience (ALI) has had with the E170s now in service. Bombardier (BMB), offering the CRJ-900NG/1000, came last. (ALI) (CEO) Rocco Sabelli said (ALI) was leaning toward the Sukhoi Superjet 100, but that the repeated delays to the airplanes’s certification were an issue. “We delayed our choice by 6 to 12 months waiting for the Superjet, and we considered the involvement in the program of an Italian company [Alenia Aeronautica], but we were still not sure about the European certification date, and we were also concerned about the prospect of being, in effect, the western launch customer for the type,” he said. The Embraer (EMB) choice also provides commonality between (ALI) and SkyTeam (STM) alliance partner and major (ALI) shareholder Air France (AFA). Air France Industries (AFI) will provide maintenance of the regional jet.

February 2011: Alitalia (ALI) and Meridiana Fly (ALS)/(EUY) are in talks about a possible partnership, (ALS)/(EUY) said, although it did not confirm reports in "Il Messaggero" that the airlines’ respective management teams are reviewing the details of a possible acquisition. The Italian newspaper reported that (ALI) would be interested in buying (ALS)/(EUY) to prevent Lufthansa (DLH) from stepping in.

“The company's future lies with national and international partnerships and the talks with (ALI) referred to in the press today should be considered in that context,” (ALS)/(EUY) said. “At this stage, no partnership agreement exists and no decision has been taken. As a consequence at this stage, any enterprise value hypothesis appears groundless.”

Meridiana Fly (ALS)/(EUY) was formed last year through the consolidation of Meridiana (ALS) and Eurofly (EUY). It operates a network of domestic, European and intercontinental routes using a fleet of 38 airplanes, comprising 17 MD-82s, 12 A320s, 4 A319s, 3 A330s and 2 ATR 42s, as of September 30, 2010. Last month, it stated it would undertake “a series of actions aimed at strengthening the competitive position of company through a more precise focus on the areas of most interest strategic” and reduce its MD-80 fleet and implement a restructuring of its cost structure and network. It is listed on the Milan Stock Exchange.

(ALS)/(EUY) posted a net loss of -€16.4 million/-$22.2 million in the first nine months of 2010 on revenue of €499.6 million. Passenger boardings totaled 3.7 million.

5 A320-216s (4075, EI-DTK; 4108, EI-DTL; 4520, EI-EIC; 4523, EI-EID; 4536, EI-EIE), deliveries.

January 2011: In June, Alitalia (ALI) will start Rome - Beijing and Rome - Rio de Janeiro.

(ALI) executives said (ALI) is putting its troubled past behind and is starting off 2011 by continuing to improve its customer service image and renewing its aging fleet. (ALI) is also targeting at least +10% passenger growth this year, Executive VP & (COO) Giancarlo Schisano said on his visit to Cairo for the release of (ALI)’s 1st 777-200ER, which was undergoing a "C" maintenance check at the Egyptair (EGP) Maintenance & Engineering base. He said (ALI) will decide this year if it will replace its 6 767-300ERs with 777s or A330s.

Schisano said the 2004 to 2008 period that saw (ALI)'s near-death and rebirth was "very dramatic." But since then, (ALI) has "renewed everything," including setting a higher standard for customer service. "Our goal is to rebuild our image," he said. Last year, (ALI) posted +12% passenger growth and is targeting at least +10% growth in 2011. "Passenger numbers, reliability, load factors and image are improving," Schisano said. (ALI) transports around 23 million passengers annually.

He said that after a massive fleet reduction, (ALI) now operates a young fleet in Europe. (ALI) operates 4,500 weekly flights. "The average age [of the fleet] has been reduced from 17 years down to 10," Schisano noted. (ALI) phased out around 60 MD-80s, with just 19 of this type left in the fleet. "Our current fleet, for example, includes 90 new or fully renewed A320 family airplanes. With the introduction of 5 more A319s, and completing the current delivery of 10 A330-200s, the average age goes <10 years," he said.

The A330 deliveries will be completed by the end of 2012; 3 airplanes will join the fleet in 2011, the remaining 4 next year. Schisano said a regional fleet upgrade is also in progress, noting that (ALI) will next year phase out 6 Embraer E170s and 10 Bombardier CRJ-900s, while adding 5 E190s and 15 E175s.

March 2011: Embraer and Alitalia (ALI) finalized an agreement for 15 E175s and 5 E190s through a lease structure to be arranged by 3rd parties. Deliveries are scheduled to begin in the 3rd quarter. The 88-seat E175s and 100-seat E190s will be configured in a single-class layout and will be used on (ALI)’s domestic and European network. They will be based at the 7 Italian airports from which (ALI) operates: Rome Fiumicino, Milan Linate, Milan Malpensa, Turin, Venice, Naples, and Catania. The 20 airplanes will progressively replace (ALI)’s existing fleet of 16 regional airplanes comprising 10 CRJ-900s and 6 E170s.

April 2011: INCDT: An Alitalia (ALI) A321 en route from Paris Charles de Gaulle to Rome Fiumicino (FCO) landed safely at (FCO) after cabin crew (CA) and passengers overpowered a passenger who attacked a flight attendant (CA), Italy's "(ANSA)" news agency reported.

According to (ANSA) and other news reports, the alleged attacker threatened a female flight attendant (CA) with some kind of knife and asked that the flight be diverted to Tripoli. He was reportedly subdued quickly. The flight attendant (CA) was treated for what were described as "minor abrasions" after landing. The alleged attacker was arrested immediately after landing at (FCO) and charged with "kidnapping and attempted hijacking," pending further investigation, according to (ANSA).

May 2011: Alitalia (ALI) reported a 1st-quarter net loss of -€89 million/-$127.7 million, a +32.6% improvement over the -€132 million deficit it incurred in the year-ago period. (ALI) noted that the narrowing of its deficit was achieved “despite the additional costs estimated at >€100 million” related to the increased price of fuel, its fleet development, the impact of the unrest in the Middle East and the earthquake in Japan. Both markets are “particularly significant for (ALI)” and negatively impacted traffic volumes, it said.

Consequently, (ALI) recorded a moderate +1.8% year-over-year growth in 1st-quarter passengers carried to 4.8 million. Load factor remained stable at 64% LF. Revenue rose +7.1% to €684 million. Operating loss was -€85 million, reduced from a negative (EBIT) of -€115 million in the March 2010 quarter but “in line” with (ALI)'s target for the period, (ALI) said.

“Considering the trend of the 1st quarter, the breakeven forecast has been confirmed for the year 2011, notwithstanding the ongoing tensions over fuel prices and the uncertainties on the recovery of the North African and Japanese markets,” (ALI) stated.

SkyTeam (STM) Alliance members: Delta Air Lines (DAL), Air France (AFA)/(KLM) and Alitalia (ALI) announced they will reduce transatlantic capacity between Europe and the USA plus Canada offered through their joint venture by -7% to -9% this fall in response to significantly higher fuel prices "and fluctuating seasonal demand."

(ALI) took delivery of a new A330-200 in a 3-class configuration. The airplane will be deployed on long-haul flights from Rome Fiumicino and Milan Malpensa to New York (JFK), Miami, Rio de Janeiro, and Beijing.

June 2011: Air Lease Corporation (ALE) will lease 10 new airplanes to Alitalia (ALI), comprising 5 Embraer E175s and 5 E190LRs under 12-year leases.

July 2011: Alitalia (ALI) as the national carrier, operates to domestic and international destinations from bases at Rome, and Milan. Alitalia (ALI) is a founding member of the SkyTeam Alliance (STM). Domestic flights serve 23 cities, while international flights serve 48 destinations in Europe, the Americas, Africa, Asia, and Australia.

20,873 employees (including 2,415 Flight Crew (FC), 4,359 Cabin Attendants (CA), & 35 Maintenance Technicians (MT)).

(IATA) Code: AZ - 055. (ICAO) Code: AZA (Callsign - ALITALIA).

Parent organization/shareholders: Compagnie Aerea Italiana (75%); & Air France (AFA)/ (KLM) Group (25%).

Airline subsidiaries/shareholdings: Air One (ADH) (100%); Alitalia Express (100%); and Volare (VLR) (100%).

Alliances: Sky Team (STM) Alliance; Air Alps Aviation; Air Europa (ARE); AirBaltic (BAU); Alitalia Express; Baboo; Bulgaria Air (LZB); China Airlines (CHI); China Southern Airlines (GUN); Darwin Airline; Etihad Airways (EHD); Japan Airlines International (JAL); Jat Airways (JAT); Jet Airways (JPL); Kenya Airways (KEN); Malaysia Aielines (MAS); (TAP) Portugal; Tarom (TRM); Ukraine International Airlines (UKR); and Vietnam Airlines (VIE).

Main Base: Rome Fiumicino Leonardo Da Vinci Airport (FCO).

Hub: Milan Malpensa Airport (MXP).

Domestic, Scheduled Destinations: Ancona; Bari; Bologna; Brindisi; Cagliari; Catania; Florence; Genoa; Lamezia Terme; Milan; Naples; Palermo; Reggio Calabria; Rome; Trieste; Turin; Venice; & Verona.

International, Scheduled Destinations: Accra; Algiers; Amsterdam; Athens; Barcelona; Beirut; Birmingham; Boston; Brussels; Bucharest; Budapest; Buenos Aires; Cairo; Caracas; Casablanca; Chicago; Copenhagen; Dakar; Damascus; Delhi; Dubai; Dublin; Frankfurt; Istanbul; Lagos; Lisbon; London; Madrid; Malaga; Malta; Manchester; Miami; Moscow; Mumbai; New York; Nice; Osaka; Paris; Prague; Sao Paulo; Shanghai; Sofia; St Petersburg; Stockholm; Tehran; Tel Aviv; Thessaloniki; Tirana; Tokyo; Toronto; Tripoli; Tunis; Valencia; & Washington.

August 2011: The Alitalia Group reported a net loss of -€94 million/-$134.9 million in the 2011 first half, a +43% improvement from the -€164 million deficit incurred in the year-ago period. (ALI) incurred a -€5 million net loss in the 2nd quarter. Half-year operating loss was -€69 million compared to a -€129 million operating loss in the year-ago period, yet (EBIT) was positive in the 2nd quarter at €17 million.

Half-year revenue rose 7% year-over-year to €1.56 billion and passengers carried increased +5.7% to 11.2 million, including +8.8% growth in the 2nd quarter. Load factor was level at 68% LF.

(ALI) said the financial improvement was "even more significant" considering a -10% revenue decrease in 2 key markets, Japan and North Africa, and the sharp increase in costs associated with the spike in fuel prices, its fleet upgrade project and the end of labor cost benefits. As of June 30, (ALI)'s operating fleet comprised 150 airplanes, of which 27 (4 A330s, 22 A320s and 1 A319) have been delivered since 2009. The average fleet age now stands at 8.9 years. (ALI)'s fleet renewal will continue in the 2011 2nd half with delivery of 10 new airplanes (one A330, 4 A319s and 5 Embraer E-jets). In addition, (ALI) has begun renewing the cabins of its 10 777s.

3rd-quarter outlook shows an "important acceleration of passenger and revenue growth" over the year-ago period, (ALI) said, adding that growth will be "particularly driven" by the intercontinental segment.

September 2011: Carpatair and Alitalia (ALI) have reached a code share agreement under which (ALI) will place its code on Carpatair flights operated via Timisoara to and from Italy, as well as on other direct flights operated by Carpatair from Italy such as Rome to Craiova and Iasi.

Monarch (MON) Aircraft Engineering signed a line maintenance technical handling agreement with Alitalia (ALI) covering its A330 operations at Male airport in the Maldives.

October 2011: The Alitalia Group reported a 3rd-quarter consolidated net income of +€69 million/+$95.9 million), up +76.9% compared to +€39 million in the year-ago quarter. The group called its P&L figures “particularly satisfactory.” Operating profit rose +60.7% to +€90 million. Total operating revenue rose +12% to €1.08 billion during the quarter on a +7.3% increase in passengers carried to 7.6 million. Load factor improved +1.6 points to 77.5% LF year-over-year.

For the 9-month period ended September 30, the group reported a dramatic reduction of its net loss to -€25 million from a -€125 million deficit recorded in the year-ago period. Operating results came in at +€21 million, reversed from a -€74 million loss year-over-year. The group pointed out that “such a result is even more significant” considering the combined impact of cost increases (in particular the cost of fuel, which increased by >+40%) and the crises in North Africa and Japan earlier this year.

Revenue for the 1st 9 months of 2011 rose +10.7%, compared to €2.7 billion for the year-ago period. Enplanements inched up +1.1% to 18.8 million, driven by a +9.4% growth of international traffic in spite of the impact of the unrest in the North African markets.

The group did not provide separate revenue figures for its full-service carrier Alitalia (ALI) and low-cost carrier (LCC) Air One (ADH) Smart Carrier but said (ADH) increased passengers carried in the 1st 9 months by +47% to >1 million. Air One (ADH) was re-launched as an (LCC), based at Milan Malpensa, in 2010; it opened a 2nd base at Pisa July 1.

Looking forward, the group said the 4th quarter is showing “a sharp slowdown in high yielding business demand” and the persistence of high fuel cost levels. It also said the board approved its 2012 - 2015 business plan. Over the next 3 years, (ALI) will put a higher emphasis on international expansion with new international (ALI) routes and “also through new operating bases of Air One (ADH),” a growth in the number of long-haul destinations and an upgrade in (ALI)’s long-haul fleet.

November 2011: Alitalia (ALI) resumed flights between Rome Fiumicino (FCO) and Tripoli, after an 8-month suspension. AZ 868 landed in Tripoli at 2 pm local time with 100 passengers on board. (ALI) is the 1st European Union (EU) airline to restart commercial (passenger and cargo) service to/from Libya. Currently, flights are operated to Tripoli Mitiga, but in the next few days, operations will shift to Tripoli International. (ALI) operates a 4x-weekly service between (FCO) and Tripoli.

January 2012: Alitalia (ALI) is proceeding with plans to merge with 2 smaller Italian competitors, Blue Panorama Airlines (BPA) and WindJet (WJT). The (ALI) board, which signed a memorandum of understanding with the 2 carriers, said the “project of integration” is “coherent with the ongoing consolidation processes into the air transport, at national and international level.” It said the carriers have “synergy potentials and are complementary with regard to product specialization, network design and served market segments.”

The Alitalia Group last year carried around 25 million passengers using a fleet of 144 airplanes. It has bases in Rome, Milan, Turin, Venice, Bari, and Catania.

(BPA), which launched operations in 1998, carried some 2 million passengers in 2011 with a fleet of 7 737-300/400s, 2 757-200s and 4 767-300ERs, according to its website. Intercontinental flights are operated under the (BPA) brand; short- and medium-haul flights are operated as Blu-Express (BLX). It has bases in Rome Fiumicino and Milan Malpensa. (BPA) signed an order for 12 Sukhoi Superjet SSJ100 airplanes at the Paris Air Show in June 2011. Deliveries are scheduled to start at the end of 2012.

(WJT), established in 2003, is a Low Cost Carrier (LCC) that operates domestic and European routes using 5 A319-100s and 7 A320-200s. It handled >2.8 million passengers in 2011 and has a 6.2% domestic market share, according to an (ALI) statement. It has bases in Catania, Palermo, and Rimini.

(ALI) will submit merger documents to antitrust authorities.

The European Commission (EC) has opened an investigation to assess whether the transatlantic joint venture (JV) between (AFA) - (KLM)), Alitalia (ALI) and Delta Air Lines (DAL) breaches (EU) antitrust rules. “The (EC) will investigate whether the partnership may harm passengers on certain (EU) - USA routes where, in the absence of the joint venture (JV), the parties would be providing competing services.” Under terms of the (JV), concluded in 2009 and 2010, the SkyTeam (STM) Alliance carriers fully coordinate their transatlantic operations with respect to capacity, schedules, pricing and revenue management. They also share profits and losses on their transatlantic flights.

The (EC) noted the investigation is “coherent with the (EC)'s recent enforcement action in relation to the transatlantic (JV)s of the 2 other airline alliances,” Oneworld (ONW) and Star (SAL) Alliances.

The (EC) formally opened antitrust proceedings into the planned transatlantic (JV) between British Airways (BAB), American Airlines (AAL) and Iberia (IBE) in April 2009. It cleared the (JV) of the 3 Oneworld (ONW) Alliance airlines in July 2010 after they accepted a series of legally binding commitments to address the (EC)’s competition concerns. The antitrust probe into the transatlantic cooperation between Star (SAL) Alliance members Air Canada (ACN), Lufthansa (DLH), Continental Airlines (CAL) and United Airlines (UAL) was opened in April 2009 and is still ongoing, the (EC) confirmed.

Meanwhile, the (EC) has closed its investigation into cooperation agreements between 8 SkyTeam (STM) Alliance members that began in 2006 when the member airlines were Aeromexico (AMX), (AFA), (KLM), (ALI), (CAL), (CSA) Czech Airlines, (DAL), and Korean Air Lines (KAL). (CAL) has since merged with (UAL) and left SkyTeam(STM) Alliance for the Star (SAL) Alliance. “This decision was taken as part of the priority-setting process in light of significant changes in the circumstances on the relevant markets. The closure of proceedings does not, however, relieve the SkyTeam (STM) Alliance members from assessing their behavior and ensuring that they comply with (EU) competition law,” the (EC) said.

A330-202 (1283, EI-EJL), ex-(F-WWKA), (ALE) leased.

February 2012: The Alitalia (ALI) Group reported a 2011 net loss of -€69 million/-$92.9 million, a +58.9% improvement from a -€168 million deficit in 2010. Operating loss was reduced from -€106 million to -€6 million “with a negative margin of 0.17% on revenues, in line with the operating breakeven objective,” (ALI) said.

Revenue increased +7.9% to €3.48 billion on a +5.5% rise in passengers carried to 25 million, of which 1.4 million flew with its low-cost carrier (LCC) Air One (ADP) Smart Carrier. International and intercontinental revenue increased +7.2% and accounted for 62% of total passenger revenue.

The group said that effective capacity management, cost-cutting measures and the development of ancillary revenue helped to successfully mitigate 4th-quarter challenges that included rising fuel prices, falling demand in Japan and North Africa, and dropping yield. Load factor gained +0.8 points to 72.8% LF.

The group added 13 new airplanes during the year and phased out 12, bringing its fleet at year end to 152 with an average age of 8.3 years. (ALI) will phase out 16 older airplanes this year and raise the rate of new airplane deliveries to at least 20, including 5 A330s to support its intercontinental expansion. It will also revamp the cabins of 10 777s.

(ALI) warned that prospects for the air transport sector for 2012 remain challenging and said the industry is likely to undergo a further fall of profits “mainly due to a slowdown in volumes growth, a fall in high yield demand and higher fuel costs. The Eurozone is particularly exposed to such factors as a consequence of the expected Gross Domestic Product (GDP) fall in the area,” it stated.

The company confirmed that Andrea Ragnetti will replace outgoing Rocco Sabelli as (CEO), effective March 5. Ragnetti is a former executive of Royal Philips Electronics.

The Russian and Italian aviation authorities have agreed to amend their bilateral agreement, adding one more designated carrier from Russia and Italy on the Moscow - Rome (FCO) and Moscow - Milan (MXP) routes. Until now, only 2 carriers, Russian Aeroflot (ARO) and Alitalia (ALI, could fly between these destinations.

According to industry experts, authorities have agreed to add 21 frequencies a week from each country on both routes. The final document has not yet been signed but final approval is expected soon.

Russian Transaero Airline (TRX) tried last year to launch charter flights from Moscow Domodedovo (DME) to (FCO) and (MXP) for the New Year’s holiday but Russian aviation authorities withdrew permission and (TRX) had to operate the flights to the closest cities to (FCO) and (MXP). (TRX) has brought legal action against the authorities.

March 2012: AirFrance (AFA)/(KLM) is aiming to buy Alitalia (ALI) in 2013 through a share swap, "La Tribune" reported.

However, using shares instead of cash to finance the acquisition will require a rebound of its share price, which is trading at around €4/$5.27, and a swift execution of its three-year “transformation plan” to bring the company back to profitability.

(AFA)/(KLM) will announce full-year results and analysts expect the group to report a net loss. Group debt is around €6.5 billion.

The Franco-Dutch group bought a 25% shareholding in (ALI) in early 2009, following the restructuring and re-launch of (ALI) under private ownership. (AFA)/(KLM) also obtained an option, subject to certain conditions, to purchase additional shares from 2013.

Acquiring full control of (ALI) is one of the main concerns of group Chairman, Jean-Cyril Spinetta, according to the French newspaper. Spinetta is also a board member of the Italian carrier.

(AFA) and (KLM) used an exchange offer for their merger in 2004. It wants to use the same mechanism for (ALI) to preserve its limited cash position, but “if the share price remains at its present level, the operation is impossible,” a company source told "La Tribune." It added that some analysts are warning that the Italian shareholders probably would prefer cash over shares of a loss-making airline.

Analysts also point to the possibility that the Italian shareholders might turn to Lufthansa (DLH), “which does have the means to pay in cash,” or might use the German card to heighten the price. (DLH) competed with (AFA)/(KLM) in 2008 to become the new (ALI)’s strategic partner/investor and was the preferred choice of then Italian Prime Minister, Silvio Berlusconi.

(ALI) reported a 2011 net loss of -€69 million/-$92.9 million, a +58.9% improvement from a -€168 million deficit in 2010. Operating loss was reduced from -€106 million to -€6 million “with a negative margin of 0.17% on revenues, in line with the operating breakeven objective,” the company said last month.

E170-200STD (0333, EI-RDC "Parca Nazionale selle Cinque Terre"), (ALE) leased and E190STD (0512, EI-RND "Parca Nazionale Dolomiti Bellunesi"), in Skyteam (STM) alliance colors, (ALE) leased.

April 2012: Alitalia (ALI) has been told by the Italian antitrust authority to give up some of its slots on the Milan Linate (LIN) - Rome Fiumicino Leonardo da Vinci International (FCO) route to allow competitors to operate a significant enough number of daily services on the route. It has given (ALI) three months to present measures on how it can transfer enough slots to a competitor that would then be able to start operations by October 28, the start of the next winter timetable period.

May 2012: Apart from the Volotea (VLZ) new Venice base (which launched at the beginning of April), the big news is the decision by Alitalia (ALI) to make Venice a base for its self-proclaimed ‘smart’ carrier, Air One (ADH). (ADH) is also taking over Alitalia (ALI)’s domestic services to Brindisi, Cagliari and Palermo.

Alitalia (ALI) plans to cut up to -1000 of its 13,000 staff according to a report by Italian newspaper "La Republica" in an effort to become profitable. In unrelated news, it has wet-leased Fokker F 70 (11565, YR-KMB) from Carpatair and currently uses the airplane on domestic services from Rome Fiumicino Leonardo da Vinci International (FCO) to Ancona Falconara (AOI), Bologna Giuseppe Marconi (BLQ) and Pisa Galileo Galilei International (PSA) airports.

June 2012: Alitalia (ALI) plans to gradually phase out its remaining 11 MD-82s until the end of December 2013 with 6 of the remaining airplanes already being retired this year.

July 2012: Alitalia (ALI) has been given the green light to acquire Catania-based WindJet (WJT), although it must surrender up to 5 slots pairs to complete the deal.

Italy’s antitrust regulator, Autorità Garante della Concorrenza e del Mercato (AGCM), cleared the acquisition following a probe launched in June. “We gave the go-ahead, but (ALI) must release slots on 3 routes,” an (AGCM) spokeswoman said.

Specifically, (ALI) and (WJT) must give up a maximum of 2 slot pairs on its Catania (CTA) - Milan Linate (LIN) route, 1 slot pair on Palermo (PMO) - (LIN) and up to 2 pairs of slots on (CTA) - Rome Fiumicino (FCO).

An (AGCM) spokeswoman said these routes were selected because both (LIN) and (FCO) are congested and (WJT) is “particularly strong” at (CTA) and (PMO).

When (AGCM) opened its investigation, it identified a total of 9 city pairs that could trigger competition concerns: (CTA) - Bologna, (CTA) - Milano Linate, (CTA) - Milano Malpensa, (CTA) - Pisa, (CTA) - Rome, (CTA) - Venice, (PMO) - Milan, (PMO) - Rome, and (PMO) - Turin.

Now (ALI) has 30 days to select an (AGCM)-approved independent trustee to manage the slot disposal. The restrictions will run from the end of summer 2012 until summer 2014 and (ALI) will have to submit a compliance report 2 weeks after the start of each (IATA) season.

(ALI) in January announced plans to pursue a merger with Italian airlines WindJet (WJT) and Blue Panorama (BPA), but in April it changed track to focus solely on (WJT), which operates scheduled and charter flights.

August 2012: Alitalia (ALI) has decided not to go ahead with its plans to acquire Sicilian low-cost carrier (LCC) Windjet (WJT) according to a news report by Italian daily newspaper "Il Messaggero." According to the report, (ALI) is not willing to comply with the restrictions proposed by the Italian antitrust (ATI) authority forcing it to give up slots on key domestic routes from Milan Linate (LIN) to Catania Fontanarossa (CTA) and Palermo Falcone e Borsellino International (PMO) as well as between Rome Fiumicino Leonardo da Vinci International (FCO) and Catania Fontanarossa (CTA) airports as a condition for getting approval for the acquisition plans. This has not yet officially been confirmed by Alitalia (ALI) and leaves the future of loss making, Windjet (WJT) up in the air for now.

The future of distressed Italian airline, Windjet (WJT) looked bleak after a Director of national flag carrier, Alitalia (ALI) said there was no chance of finding a way to keep it operating.

Alitalia (ALI) Managing Director, Andrea Ragnetti told media there was “no longer any chance of dialogue” with Windjet (WJT) representatives ahead of a meeting hosted by Italian Economic Development Minister, Corrado Passera in Rome.

(ALI) walked out of the negotiations begun several months ago after (WJT) boss, Stefano Rantuccio accused it of trying to impose unfavorable conditions on his company.

(ALI) charged that (WJT) clearly had no intention of respecting provisional agreements aimed at saving the budget operator.

(WJT) is said by Italian media to be weighed down by around 140 million euros/$170 million in debt, and its failure would mean the loss of between -500 and -800 jobs.

Passera had called on negotiators from the two airlines and the aviation authority (ENAC) to try and rescue stalled negotiations on a takeover.

(WJT) has further claimed that (ALI) wants to cut the price it would pay for a takeover, while (ALI) insists that taking on the Sicilian airline would entail “intolerable financial risks”.

All (WJT) flights have been grounded, and passengers holding tickets valid until the end of August have been directed to other airlines, for an extra fee of up to +250 euros for international flights.

No information has been given for the up to 300,000 people that have already reserved flights through October.

(ENAC) has not yet revoked (WJT)’s (AOC), however, pending the meeting hosted by Passera.

Alitalia (ALI) is planning to cut up to another -600 pilot (FC) and flight attendant (CA) jobs from October onwards according to a news report by "La Stampa."

September 2012: Alitalia (ALI) seems to be planning to withdraw its remaining nine MD-82s from scheduled operations from October 1 with the last flight currently scheduled to be AZ7581 from Cagliari Elmas (CAG) to Rome Fiumicino Leonardo da Vinci International (FCO) in the morning of October 1.

October 2012: Alitalia (ALI) has entered talks with its trade unions about a plan to cut -690 flight attendant (CA), maintenance (MT) and administration jobs. Its management plans to put a new restructuring plan in place to save another -30 million Euros following significant losses in the first half of 2012.

(ALI) has withdrawn its last 3 767-300ERs from scheduled service with (26608, EI-DDW) completing the last flight from Lagos Murtala Muhammad (LOS) via Accra Kotoka (ACC) to Rome Fiumicino in the morning of October 25. (ALI)'s long-haul fleet now consists of 12 A330-200s and 10 777-200ERs.

November 2012: Alitalia (ALI) relaunched flights from its hub at the Italian capital airport Rome Fiumicino (FCO) to the finance capital of Switzerland, Zurich (ZRH), on 29 October. The ‘old Alitalia’ previously operated the route until October 2008, and the ‘new Alitalia’ now returns with 12x-weekly frequencies, all of which will be operated using 88-seat E175s. Competition on the route comes from Swiss (CSR), which already serves the market with 28x-weekly flights.

EasyJet (EZY) has been awarded rights to operate between Milan Linate (LIN) and Rome Fiumicino (FCO), bringing to an end Alitalia (ALI)'s monopoly on this key Italian route.

(EZY) will begin operating 5x-daily on the route, which it describes as “arguably the most important route for the Italian economy,” in early 2013 using A319 airplanes.

In April, Italy’s competition authority, Autorità Garante della Concorrenza e del Mercato (AGCM) ordered (ALI) to relinquish a number of slots at (LIN) to end the monopoly created in 2008 by the merger of (ALI) and Air One (ADH). At that time, an ad hoc legislative ruling suspended the antitrust (ATI) laws governing the route, in a bid to keep the ailing (ALI) afloat. In September, (ALI) agreed to release eight of its morning and evening slots at (LIN), and the (AGCM) specified these slots should be re-allocated by October 28.

(EZY), which describes itself as Italy’s 3rd largest airline, said it welcomed the (AGCM)’s “landmark decision.”

(EZY) (CEO) Carolyn McCall said: "This represents the break-up of the last great monopoly route in Europe, linking as it does the political capital and the industrial center of Europe’s 4th largest economy. No other European flag carrier has control over a route of such importance. This is a historic decision and is a victory for Italian consumers.”

(EZY) said that, as a result of the existing monopoly, fares for the hour-long journey between the 2 cities could be as high as €289 1 way. The advent of competition on the route is widely expected to bring ticket prices down by as much as -30%.

(EZY) currently operates between Milan Malpensa and (FCO).

The Italian ruling follows the UK Civil Aviation Authority’s decision to award (EZY) the rights to operate between London and Moscow.

In January, Alitalia (ALI) will start flights from Rome (FCO) to Fortaleza, Brazil, with 2x-weekly 777s.

(ALI) has announced that it will give up its "Millemiglia" frequent flier program by the end of 2012. Although not yet officially announced, it is expected that Alitalia (ALI) will instead join its partner AirFrance (AFA)-(KLM)'s "Flying Blue (FFP)" which has also already been adopted by Aircalin (NCI), Air Europa (ARE), Kenya Airways (KEN) and Tarom (TRM) as their customer's loyalty plan.

December 2012: Alitalia (ALI) inaugurated flights on the 4,300 km route from Rome Fiumicino (FCO) to Abu Dhabi (AUH), which has been the only unserved Middle East Big 3 (MEB3)-airport without direct services to the Eternal City (flights to both Dubai and Doha are served by the respective hub carriers). Beginning on 1 December, Alitalia (ALI) has deployed one of its A330s to provide 4x-weekly frequencies on the route. (ALI) continued to expand its international network, as it launched 2x-weekly flights from its Rome Fumicino (FCO) base to the Armenian capital of Yerevan (EVN) on 11 December. Flights on the 2,700 km route are operated using A320s.

January 2013: Alitalia (ALI) started flights on the 3rd route from its Rome Fiumicino (FCO) hub to Brazil on January 14. (ALI), which already serves both São Paulo (GRU) (8 weekly departures) and Rio de Janeiro (GIG) (6), now offers 2x-weekly flights to Fortaleza (FOR), a popular tourist destination and Brazil’s 5th-largest city located in the north-eastern Brazil. Services will be operated with the 777-200 on seasonal basis until May 27.

Alitalia ((IATA) Code: AZ, based at Rome Fiumicino Leonardo da Vinci International airport (FCO)) (ALI) has strongly denied rumors by Italian newspaper "Corriere della Sera" that (ALI) the financially struggling national carrier, would be in talks with state owned railway operator Ferrovie dello Stato (FS) about a potential investment by (FS) in Alitalia (ALI).

Alitalia ((IATA) Code: AZ, based at Rome Fiumicino Leonardo da Vinci International (FCO)) has temporarily suspended the wet-lease agreement with Carpatair ((IATA) Code: V3, based at Timisoara Traian Vuia International (TSR)) (KRP) for its route from Rome Fiumicino to Ancona Falconara (AOI). This follows an incident involving an ATR 72-500 of Carpatair (KRP) on January 17 where the airplane had to return back to Ancona for an emergency landing due to a problem with its air conditioning system. A similar problem had already developed on a flight on January 7 leading to another flight having to return back to Pisa. Alitalia (ALI) is now temporarily using E175s of subsidiary, Alitalia CityLiner ((IATA) Code: CT, based at Rome Fiumicino Leonardo da Vinci International (FCO)) on the route until the cause of the incidents has been identified. Carpatair (KRP) continues to operate its second ATR 72-500 on behalf of Alitalia (ALI) between Rome Fiumicino and Pisa Galileo Galilei International (PSA) and has asked Avions de Transport Régional (based at Toulouse Blagnac (TLS)) for assistance in the investigation of two incidents.

February 2013: Alitalia (ALI) reported a 2012 net loss of -€280 million/-$370 million, worsened from a loss of -€69 million in 2011.

As the results were announced, (CEO) Andrea Ragnetti submitted his resignation. According to a company statement, (ALI) and Ragnetti “have mutually agreed to terminate their relationship. Mr Ragnetti resigned from the board and as (CEO) of (ALI) and Air One (ADH) as well as Managing Director of (ALI),” it said. Ragnetti was named (CEO) last March.

(ALI) Chairman, Roberto Colaninno has been named interim (CEO) until a replacement is found.

(ALI) said it had been affected by the economic downturn affecting much of Europe, with the recession proving both longer and deeper than expected in Italy.

Full-year revenue was up +3.3% at €3.59 billion. Passenger numbers were marginally down at 24.3 million; load factor rose +1.8%, to 74.6% LF. (ALI) added that €91 million of 2012’s deficit was associated with extraordinary costs attributed to depreciation, maintenance and sales of airplanes within the overall plan to renew the fleet, which was completed in December 2012.

During the 4-year program, 55 new airplanes joined the fleet, which was reduced from 166 to 140 airplanes. The average fleet age is 6.5 years, down from 9.3 years before the renewal program got underway.

(ALI) resumed flights on 29 January on the route from its Rome Fiumicino (FCO) hub to Prague (PRG), which it last served in January 2004. 2x-weekly departures are offered on the inter-capital route, both will be operated using A320 family airplanes. Three other airlines already operate in the market from Rome to Prague: (CSA) Czech Airlines (8x-weekly frequencies), SmartWings (TVS) (5) and WizzAir (WZZ) (3x-).

Livingston Air ((IATA) Code: JN, based at Milan Malpensa (MXP)) (LDI) President, Riccardo Toto has announced that he would have written to Alitalia (ALI) proposing that the charter carrier could replace the two ATR 72-500s (ALI) had wet-leased from Carpatair ((IATA) Code: V3, based at Timisoara Traian Vuia International (TSR)) until the recent runway overrun at Rome's Fiumicino airport. Toto proposes to take over two Alitalia CityLiner ((IATA) Code: CT, based at Rome Fiumicino Leonardo da Vinci International (FCO)) CRJ-900s and to operate them on behalf of (ALI) at a lower cost. All of Alitalia CityLiner's ten CRJ-900s have been stored at Fiumicino and the Alitalia regional carrier now operates 13 E175s and 5 E190s.

March 2013: Alitalia (ALI) returned to the southern Polish city of Kraków (KRK) on March 25, when it inaugurated 3x-weekly services from its Rome Fiumicino (FCO) hub. Poland’s 2nd-largest airport, Kraków was previously served by (ALI) from Milan Malpensa between 2005 and 2008. (ALI) then discontinued operations on the route following the decision to close its Milan hub. Kraków now returns to (ALI)’s network as its 2nd destination in the country (the other one being Warsaw, which is operated with 5x-weekly services).


April 2013: Alitalia (ALI) has gone outside the aviation industry for its new (CEO) Gabriele Del Torchio, who has already taken up his duties. He takes over from Andrea Ragnetti, who left in February after (ALI) posted a net loss of -€280 million/-$370 million for 2012, a sharp deterioration from a -€69 million deficit in 2011.

Del Torchio was previously head of the Ducati motorcycle company and has had experience in sectors ranging from finance and construction machinery to luxury motor yachts. He holds a degree in economics.

Alitalia (ALI), which is 25% owned by AirFrance (AFA) - (KLM), felt the effects last year of a depressed Italian economy, which dampened demand for air travel.

May 2013: New Alitalia (ALI) (CEO) Gabriele Del Torchio is working on a fresh business plan after revealing a 1st-quarter net loss of -€157 million/-$202.6 million, marking a -19.8% deterioration from a -€131 million loss in the year-ago period.

(ALI) will increase the frequency of its Rome - Abu Dhabi service from 4x- to 5x-weekly, effective June 13. Partner, Etihad Airways (EHD) will place its code on the additional frequency, while also extending its onward code share connections over (ALI)'s Rome Fiumicino hub. (EHD) will now code share on (ALI)-operated flights to Athens, Barcelona, Belgrade, Bucharest, Budapest, Frankfurt, Geneva, Madrid, Malaga, Malta, Milan, Munich, Sofia, Tirana, Venice, Vienna, and Zurich.

Delta Air Lines (DAL) opens seasonal daily, New York (JFK) - Shannon 757-200 service on May 11 in cooperation with AirFrance AFA)-(KLM). It also begins 6x-weekly, New York (JFK) - Keflavik 757-200 service on June 2 in cooperation with (AFA)-(KLM). Also seasonal 6x-weekly, Atlanta - Venice 767-300 service opens June 2 in cooperation with Alitalia (ALI).

June 2013: Alitalia (ALI)’s top executives will see their pay drop by -20% and administrative staff has agreed to reduced salaries and working hours under (ALI)’s latest turnaround drive.

“The Chairman, the Vice-Chairmen, the (CEO) and board members have agreed to cut their salary by -20%, while the (ALI) executives have agreed to cut their salary by -10%,” an (ALI) spokesperson said.

Meanwhile, 2,200 headquarters and sales staff will work 5 fewer days per month; however, 80% of their lost earnings will be compensated by Italian social security service (INPS).

The deal was reached, affecting 2,200 (ALI) employees represented by the Filt-Cgil, Fit-Cisl, Uil and Ugl Trasporti unions. “We all gave up something important, but we were able to fully safeguard the jobs. This task was necessary,” new (ALI) (CEO) Gabriele Del Torchio said. “Now we have an equally important task: we are working on the new industrial plan to re-launch this company.”

In May, (ALI) revealed a first-quarter net loss of -€157 million/-$202.6 million, marking a -19.8% deterioration from a -€131 million loss in the year-ago period.

Alitalia (ALI) commenced seasonal services on the 900 km route from its Rome Fiumicino (FCO) hub to Djerba (DJE) in Tunisia on June 29. (ALI) offers 2x-weekly departures to the popular leisure destination using A321s, and intends to terminate this seasonal service in mid-September.

July 2013: Alitalia (ALI) has revealed its turnaround plan, which will see increased emphasis on international services. The ‘Industrial Plan 2013-16’ by new (CEO), Gabriele Del Torchio will focus on three businesses: Alitalia (ALI); Air One (ADH); and Alitalia (ALI) Loyalty, which is developing and enhancing (ALI)’s "MilleMiglia" frequent flyer program.

On July 3rd, 2013, the loss-making Alitalia (ALI) Group announced its new industrial plan for 2013 - 2016. It includes refocusing the different roles of Alitalia (ALI) and Air One (ADH), growing intercontinental activities, developing infrastructure partnerships and extracting more value from the group’s frequent flyer program.

Possibly the most significant outcome is that it should buy time for the Group’s new (CEO) Gabriele Del Torchio, appointed in April 2013. Seeking cash from an increase in a convertible loan from shareholders and from other sources before the end of 2013, it holds out the promise of a return to a positive net result in 2016.

This is Part 1 of a report on the Alitalia Group’s new plan, its strategic decision to redefine the roles of Alitalia (ALI) and Air One (ADH) and to develop its intercontinental activities. In Part 2, its focus is on strategies around collaboration with infrastructure partners and analysis of its financial targets.

Alitalia (ALI), under its newest (CEO) Gabriele Del Torchio recently announced a new Industrial Plan 2013 - 2016, which aims to bring clarity to the airline’s future network development. 1 of the key points was to clarify the role of Air One (ADH) in relation to Alitalia (ALI). According to the latest plan, Air One (ADH) (which will be rebranded to have a greater likeness to (ALI)) will be a web-oriented Smart Carrier, dedicated to serving point-to-point short- and medium-haul connections from four bases; Catania, Palermo, Pisa, and Venice.

(ALI) will strengthen its operations at its main Rome Fiumicino hub and increase its presence at Milan Linate again (once the Alitalia (ALI) hub) and Milan Malpensa airports (where it now has competition). Rather than Air One (ADH), (ALI) will operate all national and international connections at these 3 airports, with the aim of increasing international and intercontinental services at all of them. In addition, this winter season will see the start of a major “Re-Hubbing” project at Rome Fiumicino Airport, with the aim of improving timings for business passengers wanting to make day return trips, but also to improve connections for passengers from other Italian airports, who wish to take long-haul flights, for example, to the Americas.

Alitalia (ALI) has been surprisingly candid in revealing which new routes it envisages launching in the next 3 years, providing a list of almost 40 potential new services across 4 airports, all of which are to international destinations.

* New flights from Milan Linate: to Budapest, Copenhagen, Helsinki, Malta, Prague, Stockholm, Tallinn, Vienna, and Warsaw

* New flights from Milan Malpensa: to Cairo, Moscow, Tirana, and Tunis

* Possible new destinations from Rome Fiumicino: to Ankara, Basel, Bordeaux, Damascus, Erbil, Lviv, Marrakech, Marseille, Minsk, Misurata, Nuremberg, Pristina, Rostov, Sarajevo, Skopje, and Zagreb

* New inter-continental destinations: Milan Malpensa to Abu Dhabi, Osaka, and Shanghai.
Rome to Johannesburg, Nairobi, San Francisco, Santiago de Chile, and Seoul.
Venice to Tokyo.

Even before this latest announcement, it had been clear that (ALI)’s network development was focussed on reducing domestic capacity, and adding new international destinations. According to "Assaeroporti" data for the first five months of 2013, domestic traffic at Italian airports is down -10.3% to 21 million passengers, while international traffic is up +0.2% to 31.1 million. Since the start of the winter season, (ALI) has launched 14 new international routes from Rome Fiumicino, all of which are still operating this summer - see the following:
* October 2012 to Zurich (ZRH) 12x-weekly E175, vs Swiss (CSR) 29x-weekly;
* December to Abu Dhabi (AUH) 4x-weekly A330;
* December to Yerevan (EVN) 2x-weekly A320;
* January 2013 to Prague (PRG) 2x-weekly A320, vs (CSA) Czech 9x-weekly, SmartWings 6x-weekly, Wizz (WZZ) 3x-weekly;
* March to Krakow (KRK) 3x-weekly A320;
* March to Ekaterinburg (SVX) 3x-weekly A320;
* March to Oran (ORN) 3x-weekly E175;
* Mar to Copenhagen (CPH) 2x-weekly A320, vs Norwegian (NWG) 13x-weekly, vs easyJet (EZY) 76x weekly;
* March to Bilbao (BIO) 2x-weekly A320;
* March to Montpellier (MPL) 2x-weekly E175;
* April to London City (LCY) 6x-weekly E190;
* June to Podgorica (TGD) 3x-weekly E190, vs Montenegro 3x-weekly;
* June to Antalya (AYT) 1x-weekly A319;
* June to Djerba (DJE) 2x-weekly A321.

Analysis of Innovata/Diio Mi data for July suggests that the combined Alitalia (ALI) and Air One (ADH) have cut weekly seats by around -11%, but that the number of weekly (ASK)s offered is down <-6%, indicating an increase in average sector length, all consistent with (ALI)’s strategic focus on cutting domestic capacity and increasing international capacity.

GOL (GOT) and Alitalia (ALI) have requested approval by their governments to begin code sharing on connections between Brazil and Europe for both companies. Initally, the agreement will allow Alitalia (ALI), which has more than 14x-weekly from Rome to São Paulo and Rio de Janeiro, to include its codes on (GOL) flights, permitting connections with various other Brazilian destinations.

September 2013: As the Alitalia (ALI) 1st half loss widens, it is seeking a €100 million/$135 million cash injection from shareholders.

Italy is looking to the banks to provide a temporary financial solution to keep Alitalia (ALI) airborne. (ALI), beset by problems, is looking for its major shareholder AirFrance (AFA) - (KLM) to make a cash investment and increase its 25% holding in (ALI).

Italy’s air navigation services provider (ENAV) has reduced its terminal air navigation charges -25% for the last 4 months of this year, saving airlines an estimated -€20 million/-$26.4 million.

INCDT: An Alitalia (ALI) A320-216 (CFM56-5B6/P) (4249, /10 EI-EIB "UMBERTO SEBA") skidded off the runway, while landing at Rome Fiumicino Airport (FCO) on Sunday evening, September 29th. According to the Aviation Safety Network (ASN), the right hand main landing gear failed to deploy prior to landing at Rome while on approach to runway 16L at 20:10. The flight circled before landing with the right hand gear retracted, or not fully down.

The A320 was operating flight AZ63 from Madrid. According to reports, the A320 was carrying 151 passengers, who evacuated using emergency slides. Officials said there were around 10 people who suffered “light injuries” and were treated by medical staff at the airport, (ANSA) news agency reported.

According to (ANSA), when the pilot (FC) realized the airplane’s right wheels failed to deploy, he warned air traffic control (ATC). The A320 landed about 50 minutes after aborting the 1rst approach; 25 minutes after the low approach, the A320 came to a stop on its side near the runway.

October 2013: News Item A-1: Alitalia (ALI)’s board of directors has approved a €500 million/$675.9 million emergency rescue plan that will include a €300 million capital increase to be offered in stock options by shareholders and €200 million in new lines of credit, according to a statement issued by (ALI). The Italian government will participate in the rescue in the form of the postal service, Poste Italiane, which will guarantee €75 million aimed at helping save (ALI). Alitalia (ALI) has suffered heavy losses for some time.

AirFrance (AFA) - (KLM), which owns 25% of (ALI), has not decided whether and how it will participate in the rescue. The Italian government would reportedly like (AFA) - (KLM) to increase its shareholding, but no agreement has been reached.

More answers could come October 14, when both (ALI)’s board and shareholders are planning a meeting. The (ALI) board said that the rescue plan “provides a solid basis for the future of the company.”

The International Airlines Group (IAG), parent of British Airways (BAB) and Iberia (IBE), said an emergency rescue package for Alitalia (ALI) includes “manifestly illegal [state] aid” from the Italian government and called on the European Commission (EC) to oppose it.

(ALI)’s board of directors recently approved a €500 million/$677.5 million emergency rescue plan that will include a €300 million capital increase; €75 million of that capital increase will come from state-owned postal service, Poste Italiane. (ALI)’s shareholders, including AirFrance (AFA) - (KLM) (which holds 25% of the Italian carrier), were expected to vote to approve the rescue plan.

Italian Prime Minister Enrico Letta told "The New York Times" that Poste Italiane guaranteeing €75 million to help save (ALI) “is not protectionism.” Instead, he said, the additional capital will buttress (ALI) as it goes into negotiations with potential international investors, including (AFA) - (KLM). The Italian government reportedly would like (AFA) - (KLM) to increase its shareholding in (ALI).

The (EC) said it had not yet been formally notified of the (ALI) rescue plan, and would make a judgment on the package’s legality once it knew the details. (ALI) began a new connection to Vienna (VIE) from Milan Linate (LIN) on October 28th. (ALI) will begin operations with a 10 times weekly service on the route. However, it will quickly increase this to 11x-weekly flights after the first week. Using an 88-seat E175, the 629 km route currently has no direct competition, but NIKI (NKI) offers an 11x-weekly operation into nearby Milan Malpensa, with Austrian Airlines (AUL) also operating from Vienna to Malpensa up to 4x-daily.

News Item A-2: 2 A330-202s (1308, EI-EJM; 1327, EI-EJO), deliveries.

November 2013: Alitalia (ALI) reported a net profit of +€7 million/+$9.4 million for the 3rd quarter ended September 30, down -74% from +€27 million during the year-ago period.

AirFrance (AFA) - (KLM) has given Alitalia (ALI) until November 14 to agree to strict conditions that must be met before it participates in (ALI)’s capital increase. “We will help (ALI), but under very strict industrial, social and financial conditions,” (AFA) - (KLM) Chairman & (CEO), Alexandre de Juniac. “If these conditions are met by November 14, we can consider a strengthening of our partnership. If not, we will not follow.”

De Juniac insisted (ALI) must be run as a “normal business” and subjected to a “strong restructuring.” (AFA) - (KLM)’s prerequisites include (ALI) shrinking its medium-haul network, stabilizing its long-haul flying and completely restructuring its debts. “(AFA) - (KLM) is not in a position to have very deep pockets to finance everything,” De Juniac said.

(AFA) - (KLM) is (ALI)’s primary shareholder with a 25% stake. De Juniac struck out at (ALI) for not involving (AFA) - (KLM) in its refinancing discussions. “As primary shareholder, we would have liked to have been involved during the course of the negotiation, rather than discovering the results at the end of the discussion,” he said.

However, an (AFA) - (KLM) spokeswoman denied reports that it is calling on (ALI) to slash -5,000 jobs.

Several news agencies are reporting that Alitalia (ALI) shareholders will decide whether or not to participate in Alitalia’s €300 million/$402 million cash call. Also, (ALI) is considering slashing about -2,000 jobs; local media has reported that as many as 4,000 jobs could be affected. Measures could also include salary cuts for pilots (FC) and flight attendants (CA), early retirement incentives and a reduction of temporary workers. Media reports indicate this could generate a savings of up to -€400 million.

(ALI) is reportedly making daily losses amounting to “6-digit thousands of euros.” (ALI) posted a first-half loss of -€294 million, worsened from a -€201 million deficit year-over-year. The latest 6-month loss is greater than for the whole of 2012.

(ALI) has not been profitable in more than a decade. It is expected (ALI)’s strong unions will play an important role in the discussions.

(ALI) may cut up to -2,600 jobs in its 1st mass lay-offs since (ALI) was privatized, union sources said, citing a restructuring plan the company approved last week to cut costs and keep its planes in the air. “The numbers in the restructuring plan talk about -2,500 to -2,600 job cuts (1,300 are fixed-term contracts and then there is talk of 220 pilots (FC), 400 cabin staff (CA) and 600 - 700 ground staff (MT),” one of the sources told "Reuters."

Italy’s unions have said they were gearing up for a battle, should job cuts at the airline compound the situation for workers already struggling in a grim economic environment. The response would be “very, very hard”, Susanna Camusso, head of the (CGIL) union, said in a radio interview. More than a 3rd of its staff were laid off when (ALI) was privatized 5 years ago.

(ALI) remains a political hot potato for the fragile coalition government of Enrico Letta, and any tough restructuring of the ailing flag carrier to suit a foreign investor would rankle anyone.

An (ALI) spokeswoman said the revised industrial plan only mentioned cost cuts and did not specifically refer to any redundancies at this stage. Ryanair (RYR) announced a major increase in the domestic flights it offers in Italy including launching a hub at Rome’s Fiumicino Airport.

The expansion comes a day before the deadline for a crucial capital injection into struggling Italian flag carrier Alitalia (ALI) which has been on the brink of having its planes grounded, but Ryanair (RYR) said its move should help the airline in its efforts to restructure.

(RYR) announced it will base 6 airplanes at Fiumicino, Rome’s mostly domestic airport, and slowly transfer the flights it had operated from Ciampino airport and increase to 9 the number of domestic Italian routes it flies. The number of airplanes based there could double within a year as it receives new airplanes from Boeing.

(RYR) said it would continue to develop domestic and international flights from Ciampino, the mostly international airport. (RYR) said its one-way flights on new domestic routes will start at 49 euros/$66 including taxes, compared to 75 euros on (ALI) flights.

(RYR) said this would benefit (ALI) as it would ensure the feeding of passengers into the international flights it operates from Fiumicino. “(RYR) will guarantee that connectivity to Rome and to southern Italy will be maintained regardless of (ALI)’s plans to reduce capacity on domestic routes,” said (RYR)’s Deputy (CEO) Michael Crawley.

(RYR) said it was willing to cooperate with (ALI), an offer the Italian company swiftly rejected. “(ALI) thanks (RYR) for its proposal to collaborate at Rome Fiumicino airport, but we have our own strategy” said (ALI).

AirFrance (AFA) - (KLM), which owns a 25% stake in (ALI), has said it won’t participate as it believes the restructuring plan put forward by the company won’t lower costs sufficiently to make the airline successful. The Italian government is looking for another major international airline to partner with Alitalia (ALI).

The state-owned Italian postal service has been tapped to contribute up to 75 million euros in the capital increase, triggering rivals’ allegations of illegal protectionism. Alitalia (ALI) says Italian banks are also lined up to lend it 200 million euros.

(ALI) was already bailed out by taxpayers 5 years ago in a controversial operation that handed a consortium of private Italian companies a majority stake, part of which was later sold to (AFA) - (KLM). But it still struggled and racked up losses, with its debt now standing at 1.2 billion euros.

It was nearly grounded last month when Italian energy group (ENI) threatened to stop fuel supplies because of unpaid debts.

December 2013: Alitalia (ALI) said it is confident it will still reach its cash call target of €300 million/$406 million from shareholders, despite having only €173 million in pledges, when the deadline for exercising option rights expired.

(ALI) has been seeking an infusion of funds from shareholders to continue operations, although industry observers believe the €300 million figure will only be enough to keep the company operating for a few months. Its 2013 1st-half loss alone approached the sum now being requested from shareholders.

In a brief statement, (ALI) said that (apart from the money already pledged) it had received reservations for the unsubscribed shares. These reservations must be confirmed, and payment received by December 10. “According to the information available to date, the company believes that, taking into account also the share subscription commitments already received, the capital increase is likely to be fully subscribed,” it said.

(ALI) declined to answer any further questions, noting that “as the situation is still ongoing” it could not go beyond the terms of its official statement. (ALI) has been hoping that its largest shareholder, AirFrance (AFA) - (KLM), would come to its aid, either with a cash injection or a takeover bid for the airline. However, the France-Dutch airline said that while it “confirms its commitment to remain a loyal and serious Alitalia (ALI) partner in the industrial partnership,” and praised efforts to improve its performance, (ALI)’s recovery plan failed to meet the “necessary financial restructuring measures.” Alitalia ((IATA) Code: AZ, based at Rome Fiumicino) (ALI) and its low-cost carrier (LCC) subsidiary, Air One ((IATA) Code: AP, based at Rome Fiumicino) (ADH) are set to collectively fill the void left by Belle Air (BEL) on Italy - Albania flights. Alitalia (ALI)'s inaugural 3x-weekly Bari to Tirana service will launch from January 5, 2014 with A319-100 equipment, while Air One (ADH) will launch its own 4x- to 7x-weekly services to Tirana from Bologna, Venice Marco Polo, and Verona from December 9 using A320-200s.

Ryanair (RYR) has said that (RYR)'s relocation to Rome's Fiumicino airport could assist Alitalia (ALI) with its current problems. (RYR) will base 6 airplanes at Rome’s Fiumicino Airport and will launch services to 3 new domestic destinations in Southern Italy (Catania, Palermo (Sicily), and Lamezia (Calabria)) from the capital’s gateway airport December 18. It said the new routes were being launched in response to “numerous requests” from Southern Italian airports.

In addition, (RYR) said it would operate daily flights from Fiumicino to Brussels Zaventem and Barcelona El Prat airports. It also operates domestic services from its current base at Rome Ciampino Airport to Alghero, Bari, Brindisi, Cagliari, Comiso, and Trapani.

However, (RYR) also said that over the next 12 months it would move many existing domestic services from Ciampino to Fiumicino, which will be (RYR)’s main base for domestic operations in Italy, freeing up slots at Ciampino to introduce more international routes.

(RYR) will increase the number of airplanes based at Fiumicino to 10 or 12 from October 2014 when it starts taking delivery of new Boeing airplanes on order.

Separately, (ALI) has rejected a (RYR) proposal to feed (ALI)’s international network at Fiumicino. (RYR) has requested a meeting with (ALI) to examine other opportunities for cooperating with and assisting the Italian carrier, which has suffered heavy losses for some time. (RYR)’s Michael Cawley said: “We hope (ALI) will take up our offer to cooperate with them, as we believe (RYR)’s new low-fare domestic flights to Fiumicino can significantly assist (ALI) through the restructuring, which is necessary to restore its profitability and secure the future of as many of (ALI)’s employees as possible. (RYR) believes that by offering to feed (ALI)’s international hub at Fiumicino and by searching for opportunities to work with and assist (ALI) in its turnaround, that we can help the new investors and the management of (ALI) to return that airline to profitability and viability.” However, (ALI) said it has its own strategy, business plan, fleet and crews to feed its own international and intercontinental connections from Fiumicino. It argued that (RYR)’s prices on new domestic routes from Fiumicino are largely in line with its own fares, but (ALI)’s fares include such extras as checked and carry-on luggage, snacks and drinks onboard, airport check-in and frequent flyer miles.

(ALI) said that in most advanced countries, hub carriers and (LCC)s do not collaborate at main gateway airports because the (LCC) business model is more suited to smaller, out-of-town airports. Cawley said (RYR) is responding to airports anxious to “secure domestic routes as (ALI) continues to restructure.” He said, “(RYR) will guarantee that connectivity to Rome and to S Italy will be maintained regardless of (ALI)’s plans to reduce capacity on domestic routes.”

Etihad Airways (EHD) has confirmed it is in talks with (ALI), which will announce it has met its €300 million/$413 million) funding target on December 20. “(EHD) is in discussions with (ALI). We have no further comment at this time,” an (EHD) spokesman confirmed, following reports that (EHD) is in advanced talks to buy up to 49% of (ALI). An (ALI) spokeswoman declined to comment on the Etihad (EHD) negotiations, but said an announcement on a capital increase, needed to safeguard (ALI)’s future, is imminent.

“With today’s subscription by "Poste Italiane" for the final €75 million, the €300 million capital increase process could be defined as completed. We will not have an official statement about that until tomorrow,” a spokeswoman said.

Initial take-up for the capital increase looked shaky. When the capital increase option deadline expired on November 28, only €173 million of the €300 million total had been secured. The funding is needed to support (ALI)’s €500 million emergency rescue plan, which includes the €300 million capital increase and €200 million in new lines of credit. AirFrance (AFA) - (KLM), which owns 25% of (ALI), has so far declined to participate.

Later, Etihad Airways ((IATA) Code: EY, based at Abu Dhabi International) (EHD) reportedly struck a deal with (ALI). Italy's Transport Minister, Maurizio Lupi told "(ANSA)" newswire, "I can't but express satisfaction for the formalization of Etihad (EHD)'s interest in Alitalia (ALI). It is an important sign that shows the path taken by the government two months ago to safeguard our country's strategic air transport interests, and that of its historic company, was the right one." No disclosure was made on the exact amount to be invested but "Reuters" has pointed to a EUR 350 million/USD 478.38 million investment in return for 49% in (ALI).

January 2014: Alitalia (ALI) will begin 2 new services from Milan Linate Airport: Warsaw, 4x-weekly on March 30 and seasonal Prague 3x-weekly from March 30 - October 25.

February 2014: A possible lifeline for Alitalia (ALI) appeared closer as (ALI) said that Etihad Airways (EHD) was close to deciding if it would commit to an investment. The two airlines announced in December that talks were ongoing over a possible investment by (EHD) in loss-making (ALI).

(ALI) received a €300 million/$413 million cash injection some weeks ago, but continuing heavy losses had led some observers to forecast another financial crunch for (ALI) by the middle of the year.

(EHD) President & (CEO) James Hogan and (ALI) (CEO), Gabriele Del Torchio (ALI) said the 2 airlines “have entered the final phase of a due diligence process about a possible investment by (EHD) in (ALI).
“During the next 30 days both companies and their advisors will determine how a common strategy can be developed which meets the objectives of both parties. “Any issues that may prevent the establishment of an appropriate business plan will have to be resolved to ensure the plan can be implemented to move (ALI) to sustainable profitability.”

Rapidly expanding (EHD) has been showing particular interest in boosting its presence in Europe in recent months, having taken control of Air Serbia (JAT) and launching a wide-ranging code share agreement with Air Europa (ARE) and a further code share with Latvia’s airBaltic (BAU). (EHD) has minority stakes in a number of airlines, including airberlin (BER), Aer Lingus (ARL), Virgin Australia (VOZ) and India’s Jet Airways (JPL).

(EHD) has also launched a European regional carrier, Etihad Regional, via an equity stake in Swiss carrier, Darwin.

AirFrance ((IATA) Code: AF, based at Paris CDG) and (KLM) Royal Dutch Airlines (KLM) ((IATA) Code: KL, based at Amsterdam) parent, (AFA)-(KLM) (CEO), Alexandre de Juniac said that a planned investment in Alitalia ((IATA)Code: AZ, based at Rome Fiumicino) (ALI) by Etihad Airways ((IATA) Code: EY, based at Abu Dhabi International) (EHD) could strengthen his airline's plans to re-invest providing certain restructuring conditions are met. In his interview with the "Financial Times," Mr de Juniac said he was keeping (AFA)'s option to invest in Alitalia (ALI) "open." “(EHD) brings new money and also a co-operation in the East. It is something that is changing the business case,” he said. He added that (AFA) would wait for the outcome of talks between the Italians and the Emiratis before playing its hand. Despite (AFA)-(KLM) now holding only a 7% stake in (ALI), Mr de Juniac said a cut in ties would be detrimental to both parties, but more so on the Italians' part. “I think we are an even more important partner for them [Alitalia] than they represent for us. It would be detrimental to both companies if our links were cut, but probably slightly more detrimental for (ALI),” said Mr de Juniac.


April 2014: News Item Alitalia (ALI) will wet-lease an ATR 72 from Mistral Air ((IATA) Code: 7M, based at Rome Fiumicino) (MSA) for use on its Rome Fiumicino to Ancona route with effect from May 1.

Darwin Airline ((IATA) Code: F7, based at Lugano) had been operating the route three times daily with its Saab 2000 fleet but cancelled the route as of March 29. Alitalia (ALI) had code shared on the services operated as "Etihad (EHD) Regional."


June 2014: After months of negotiations, Etihad Airways (EHD) and Alitalia (ALI) announced on June 25th they have agreed to a deal that will see the fast-expanding (EHD) take a 49% stake in the struggling Italian flag carrier. The 2 carriers confirmed they had “agreed on the principal terms and conditions of a proposed transaction, whereby (EHD) will acquire a 49% equity stake in (ALI). The airlines will now move to finalize the transactional documents, which will include the agreed-upon conditions, as soon as possible. The conclusion of the investment is subject to final regulatory approvals.”

The statement did not detail how much (EHD) is paying for the stake, but press reports have talked of a cash injection of as much as €500 million/$680 million. This follows a rescue package, agreed to late last year, which included €300 million from new investors, plus €200 million in new lines of credit. However, with (ALI) continuing to hemorrhage cash, it was widely believed (ALI) would run out of funding by late summer.

The two airlines have been in talks since late last year, with major areas of negotiation including the number of redundancies required to slim down the business, together with ways of restructuring (ALI)’s existing debts.

Alitalia (ALI) has been a perennial loss maker, but is regarded by the Italian government as a national entity that must be preserved.
(ALI)’s attraction for (EHD) lies in its extensive route network (including extensive routes to South America) that has virtually no overlap with that of (EHD). If the 2 carriers’ networks are successfully integrated, they would see further traffic flows funneled through Etihad (EHD)’s Abu Dhabi hub.

The deal marks the most audacious of (EHD)’s strategy of acquiring stakes in carriers. Other equity partner airlines include airberlin (BER), Air Seychelles (ASY) and Virgin Australia (VOZ).

AirFrance (AFA) - (KLM) has a 25% stake in (ALI). (EHD) holds minority stakes in a number of airline partners and in May increased its stake in Virgin Australia (VOZ) to 21.24% from 19.9%, following approval from Australia’s Foreign Investment Review Board.

July 2014: Alitalia (ALI) has commenced its only route to Greece from Milan Malpensa (MXP) on July 13th, launching 2x-weekly (Saturdays and Sundays) operations to Rhodes (RHO). Flown by the SkyTeam (STM) Alliance carrier’s 148-seat A320s, the seasonal service, which operates until August 31st, will face direct competition from easyJet (EZY) (4x-weekly) and Meridiana (ALS)/(EUY) weekly. (ALI) commenced a 3x-weekly service on the 1,334 km sector between its home hub of Rome Fiumicino (FCO) and the Greek holiday destination of Heraklion (HER) on July 26th. As expected with this type of route, it is a seasonal operation, flying up until August 31st only. The service, flown by a variety of equipment, will be up against 4 incumbents (easyJet (EZY) (flying 5x-weekly), Blue Panorama Airlines (BPA) (4x-weekly), Vueling (VUZ) (2x-weekly) and Meridiana (ALS) (weekly).

August 2014: The long-mooted deal between Etihad Airways (EHD) and Italian flag-carrier, Alitalia (ALI) finally came to fruition August 8th in a complex transaction worth €1.75 billion/$2.35 billion.

Both sides said they planned a reinvigorated and profitable (ALI), with particular attention being paid to developing long-haul routes. The deal must first gain regulatory approval and is subject to (ALI) and its existing shareholders completing certain conditions.

(EHD) said it was taking a 49% stake in (ALI) for €387.5 million.
However, this is just a small part of the overall plan, which foresees (ALI) becoming profitable by 2017.

(EHD) will also pay €112.5 for a 75% share in (ALI) Loyalty, which operates "MilleMiglia," the airline’s frequent flyer program, and a further €60 million for 5 pairs of slots at London Heathrow Airport (LHR). These will be leased back to (ALI) on an arm’s length basis.

The transaction is due to be completed December 31, 2014.

(EHD)’s investment will be provided through a combination of equity injections, asset purchases and other financing facilities, and funding arrangements to restructure (ALI)’s balance sheet.

(EHD)’s contribution will be complemented by a further equity investment of €300 million from existing (ALI) shareholders, including Intesa San Paolo (€88 million), Poste Italiane (€75 million), UniCredit (€63.5 million), Atlantia (€51 million), (IMMSI) (€10 million), Pirelli (€10 million), and Gavio (€2.5 million).

Beyond this direct investment, there will be up to €598 million in financial restructuring of short- and medium-term debt by financial institutions and existing bank shareholders. Italian financial institutions have extended €300 million of new loan facilities.

Announcing the deal, (EHD) President & (CEO), James Hogan, said: “We believe in (ALI). It is a great brand with enormous potential. With the right level of capitalization and a strong, strategic business plan, we have confidence (ALI) can be turned around and repositioned as a premium global airline once again.”

(ALI) has only occasionally made a profit in its long history and has been teetering on the brink of insolvency for some time. A capital injection late last year bought some breathing space, but commentators warned (ALI) was likely to run out of money by this summer.

Talks with (EHD) have been continuing for months, with particular sticking points including finding a way to deal with (ALI)’s debt pile and cutting the Italian company’s workforce.

(ALI) (CEO), Gabriele Del Torchio described the agreement as “an excellent outcome for (ALI). We have had to take some tough decisions in a very robust negotiation process, but we have achieved the consensus we require to create the right shape and size for (ALI) in the future. This investment will provide financial stability and enable us to position (ALI), and the travel and tourism industry in Italy, for long-term growth.”

Hogan said the agreement was “a strategic, long-term commercial investment” for (EHD). “On completion, we are committed, with the other shareholders, to build a reinvigorated (ALI) as a competitive, sustainable and profitable business that can operate successfully in the global air travel market.

He cautioned: “However, ultimately it has to work as a business and the goal is for sustainable profitability from 2017.” “(ALI) can succeed and it can grow again, but it needs to build from solid foundations. We have made it clear from the start that our entire investment should be focused on supporting the implementation of the new business plan, which will see this goal come to fruition. There is a long road ahead, 1st to complete the transaction and then to deliver this new vision. Today marks a critical step on that journey.”

On June 25, Etihad Airways (EHD) and (ALI) agreed to this deal that will see the fast-expanding (EHD) take a 49% stake in (ALI). When the deal receives final regulatory approvals, both (ALI) and (ASY) could soon be part of the (EHD) stable of regionally connected airlines. (EHD) currently holds a 40% stake in Air Seychelles (ASY).

As Alitalia (ALI)’s tie-up with Etihad Airways (EHD) looks to be nearing a final agreement, it is interesting to see how (ALI) (and its subsidiary Air One (ADH)) has evolved in the last 12 months. Using schedule data for August 2014 and August 2013, it can be seen that combined seat capacity was almost unchanged (+0.6%), while the number of flights was up almost +3%.

When the numbers are broken down to an airport level, more significant variations can be seen. While capacity at the airport’s home base of Rome Fiumicino is shown as down just <2%, capacity at Milan Linate was up >20% thanks to several new routes having been launched in the last 12 months. The only non-Italian airport among the top 12 is Paris (CDG), which ranks at #10. If the analysis used Available Seat Kilometers (ASK) instead of just seats, New York (JFK) and Tokyo Narita would rank 3rd and 4th (after Rome and Milan Linate), with Sao Paulo (7th), Buenos Aires (8th), Los Angeles (9th) and Miami (12th), all highly ranked.


Just missing out on a top 12 place in terms of seat capacity is Tirana, the capital of Albania, where Air One (ADH) is now the biggest airline, (ALI) is 3rd, while combined they have increased their seat capacity by +90% after Belle Air (BEL)’s demise in late November 2013. Cagliari Airport’s impressive growth is as a result of (ALI) increasing its operations to Milan Linate from just 1 daily flight to up to 9 daily flights, following Meridiana (ALS)’s decision to suspend operations on the route at the end of the summer 2013 season. Meridiana (ALS) also dropped its Rome service as a result of which (ALI) increased its service from 7x- to 10x-daily flights.

(ALI) and Air One (ADH) have added a total of 7 new airports to their combined networks since last August. (ALI) has added Skopje in Macedonia from Rome and Comiso, a new domestic destination, from both Rome and Milan Linate. Air One (ADH) has added Düsseldorf, Lyon and Stuttgart from Catania, London Gatwick from Catania and Palermo, and Berlin Tegel from Catania, Palermo and Pisa.

A total of 45 new routes have been added between the 2 carriers, including 3x-daily flights between Milan Linate and Alghero in Sardinia, 2x-daily flights between Milan Linate and Vienna, as well as lower frequency services between Milan Linate and Athens, Prague and Warsaw. Since last August (ALI) and (ADH) combined have ceased operations at 7 airports worldwide. (ALI) has stopped/suspended Rome flights to Antalya (September 2013), Caracas (June 2014), Djerba (September 2013) Ekaterinburg (January 2014) and Tripoli (July 2014), while Air One (ADH) has stopped operating to Kiev Zhulyany (from Catania) and Samara (from Venice). A total of 13 routes that were served at least daily last summer, are no longer operated by either (ALI) or (ADH). Sorted by Italian airport (domestic routes obviously appear twice) these are:

* Alghero to Milan Malpensa
* Bari to Venice Marco Polo
* Catania to Florence, Genoa
* Florence to Catania, Amsterdam
* Genoa to Catania, Naples
* Lamezia Terme to Milan Malpensa
* Milan Malpensa to Alghero, Lamezia Terme, Olbia, Trapani
* Olbia to Milan Malpensa
* Naples to Athens, Genoa, Venice Marco Polo
* Rome Fiumicino to Caracas and Tripoli
* Trapani to Milan Malpensa
* Venice Marco Polo to Bari, Naples

In terms of Available Seat Kilometers (ASK)s almost 40% of dropped (ASK)s are from just one route, the daily service from Rome to Caracas in Venezuela, which, with a sector length of >8,300 km, was (ALI)’s 9th longest route last summer.

(ALI)’s long-haul network (routes >6,000 kms) is relatively small considering Italy’s ranking of 11th among global economies in 2013. Just 14 long-haul services are operated non-stop from Italian airports to 11 destinations, with only Tokyo Narita served from 3 airports. Only the Rome to New York service is served with at least 2x-daily.

* From Milan (MXP) to New York JFK and Tokyo Narita
* From Rome (FCO) to Boston, Buenos Aires, Chicago O’Hare, Los Angeles, Miami, New York (JFK), Osaka Kansai, Rio de Janeiro, Sao Paulo Guarulhos, Tokyo Narita, Toronto Pearson
* From Venice (VCE) to Tokyo Narita.

Japan is currently the only country served in Asia (Osaka and Tokyo) with (ALI) not operating any services to such important economies as China or India. Out of the 54x-weekly flights from Asian airports to Rome, (ALI)’s 2 Japanese routes account for just 12 of them.

(ALI)’s route network plans show the Italian carrier being pulled into orbit around the fast-growing, Abu Dhabi-based Etihad Airways (EHD), following the closing of a long-awaited major investment deal.

From winter 2014, (ALI) will increase frequency between Rome Fiumicino and Abu Dhabi from 5x-weekly to daily, and start a new daily service between Milan Malpensa and the Emirate. (EHD) already operates daily services on these routes. From next summer, direct flights to Abu Dhabi will also begin from several other Italian cities, including Venice, Catania, and Bologna.

(ALI)’s short-haul services have been affected by low-cost carriers (LCC) such as Ryanair (RYR), while domestic routes have also been hit by competition from high-speed railway services.

While maintaining some short-haul services, proposed development of (ALI)’s network focuses on the growth of long-haul flying from Fiumicino and Malpensa. This will include new destinations, increased frequencies to some existing destinations, plus enhanced connections to Abu Dhabi in order to funnel (ALI) passengers into (EHD)’s hub and onward connections.

The 2 airlines foresee Fiumicino developing as a larger European intercontinental hub, with up to 5 new routes over the next 4years, while long-haul flights from Malpensa will more than double to 25x-weekly by 2018. To meet these changes, (ALI)’s wide body fleet is planned to grow by a 3rd, while its narrow body fleet will shrink.

Members of (ALI)’s frequent flyer program will be able to earn and spend miles on (EHD) and its partner airlines. The intention is to integrate the frequent-flyer programs of carriers in which (EHD) has an equity stake.

Cost savings will come through streamlined hub operations and joint procurement in areas such as airplanes, engines, Maintenance Repair & Overhaul (MRO), training, catering, ground handling and fuel.

(ALI)’s cargo business will be relaunched and expanded, with the establishment of a center of excellence in northern Italy, plus investment in handling capabilities at Italian airports and the optimization of an integrated cargo network.

(EHD) President & (CEO) James Hogan said: “The possibilities when we knit together our network with those of our existing equity partners (including airberlin (BER), Air Serbia (JAT), Etihad Regional, Jet Airways (JPL), Virgin Australia (VOZ), Air Seychelles (ASY), and Aer Lingus (ARL), and of course our strategic code share partner, AirFrance (AFA)-(KLM) will provide the most compelling customer offering.” (EHD) and (ALI) already code share on 31 destinations, apart from the Rome and Milan to Abu Dhabi trunk routes.

Air Seychelles (ASY) and Alitalia (ALI) have inked a code share agreement enabling passengers on both airlines to fly between Rome, Milan, and Venice to Seychelles via Abu Dhabi, with just 1 ticket for their entire journey. The agreement became effective August 4.

(ASY)’s HM flight code will be placed on (ALI)’s 5x-weekly return nonstop flights between Rome and Abu Dhabi, on 10 connecting flights to Milan via Rome, and on 12 connecting flights to Venice via Rome.

(ALI) will place its AZ code on 7 of Air Seychelles (ASY)’s return flights between Abu Dhabi and Seychelles, and on 47 flights per week to and from Seychelles’ 2nd largest island, Praslin, permitting stopovers on the main island of Mahé. (ASY) (CEO) Manoj Papa said: “The partnership with Alitalia (ALI) enhances Air Seychelles (ASY)’s visibility in the Italian market [which is] Seychelles’ third largest European market after Germany and France.”

(ALI) will ground its low cost carrier (LCC) short-haul subsidiary, Air One (ADH) this winter, with non-seasonal routes being taken over by the mainline unit (ALI). (ALI) stopped short of saying (ADH) is being closed, but added "Some routes will go to Alitalia (ALI). The others are seasonal flights and would be closed for winter anyway. We don't know yet what will happen in the summer (2015) season." (ALI) strongly rejects local media reports that Etihad (EHD) demanded Air One's (ADH)'s closure as a condition of its recent $1.76 billion/$2.32 billion investment in (ALI).

September 2014: Alitalia (ALI) started its 2nd service in a week from its Rome Fiumicino (FCO) hub, having already resumed a 2x-weekly A330 service to Caracas on September 1, this time commencing 2x-weekly (Wednesdays and Saturdays) operations to Marrakech (RAK) on September 3. Flights are flown using (ALI)’s 148-seat A320s.

(ALI) has named Silvano Cassano as (CEO) of the “New Alitalia.”
Silvano will become (CEO) of (ALI), which will become effective after (ALI) closes a major investment deal with Etihad Airways (EHD) to return (ALI) to profitability.

Silvano has >35 years of experience in senior management roles across a number of industries. He has also served as Chairman & (CEO) of Italian shipping company Grandi Navi Veloci, (CEO) of global fashion brand, the Benetton Group, (CEO) of Fiat Auto Financial & Consumer Services, and VP European Operations at Hertz Europe.

Alitalia (ALI) has taken another step in its restructuring following the arrival of Etihad (EHD) as a major shareholder by appointing a new Chief Commercial Officer (CCO) Ariodante Valeri. Ariodante was previously General Manager at Italian ferry company Grandi Navi Veloci (GNV), and was described by (ALI) as an experienced Sales & Marketing leader who had helped chart (GNV)’s strategic long-term growth.

He has been in the transportation and consumer industry for >30 years. Apart from his recent post at (GNV), he has held top-level positions with automaker Fiat, car-hire company, Hertz Italia and fashion brand, the Benetton Group. Valeri will start his new role with Alitalia (ALI) on October 1 and will lead (ALI)’s Sales & Marketing operations.

He will be faced with a situation in which (ALI) faces fierce competition by low-cost carriers (LCC)s and domestic high-speed railway services. However, the new link with Etihad (EHD) should provide increasing opportunities to sell long-haul services to consumers in a greatly increased long-haul route network, it now has access to via Etihad (EHD)'s Abu Dhabi hub and across the networks of its other equity partners.

(ALI) (CEO) Gabriele Del Torchio commented: “We are delighted to welcome Ariodante as the new (CCO), where his leadership skills and extensive commercial experience will be invaluable, as we transform and revitalize (ALI) as a competitive, sustainably profitable business.” Ariodante added: “I look forward to working with the many professionals at (ALI). It is an exciting time in the company’s history as we develop (ALI) into a world-class global carrier.”

The long-mooted deal between Etihad Airways (EHD) and (ALI) came to fruition on August 8 in a complex transaction worth €1.75 billion/$2.35 billion, which saw (EHD) take a 49% stake in (ALI) for €387.5 million. However, this is just a small part of the overall plan, which foresees (ALI) becoming profitable by 2017.

Both sides said they are planning a reinvigorated and profitable (ALI), paying particular attention to developing long-haul routes. The deal must 1st gain regulatory approval and is subject to (ALI) and its existing shareholders completing certain conditions.

The transaction is due to be completed by December 31, 2014.

(ALI)’s senior management has embarked on a series of staff meetings to brief its workforce on (ALI)’s future path with Etihad Airways (EHD) as a major shareholder. There will be 2 days of meetings with personnel in Rome, then managers will meet staff from Milan’s Linate and Malpensa airports September 15. Staff meetings will be on (ALI)’s future strategy and the details of its future partnership with (EHD), which in August announced a deal to buy 49% of (ALI). The agreement awaits final regulatory approval. One of the reasons for the lengthy negotiations between the parties leading up to the announcement was the need to hammer out agreement on cutting (ALI)’s workforce as part of (ALI)’s survival into the future.

Although the unions recognized the importance of securing a lifesaving deal with (EHD), the prospect of potentially losing several thousand workers as the company attempted to get its costs under control, remains a painful prospect.

Sessions started with briefings led by (ALI) Chairman, Roberto Colaninno, supported by (EHD) President & (CEO), James Hogan. These were followed by more in-depth briefing sessions led by senior (ALI) managers for different groups of employees. “Our people are the backbone of our business and we are committed to an open and transparent approach to keeping them fully up to date on (ALI)’s plans for the future,” Colaninno said. “These sessions are the 1st step in that process.

“We need to continue this process now, as we also work to secure regulatory approval, so that we are prepared to immediately start the process of transforming (ALI) going forward. We look forward to an open and honest dialogue with our employees as we move forward together as a reinvigorated business.”

October 2014: News Item A-1: Airberlin (BER) and Alitalia (ALI) have signed a strategic code share agreement on all 412 weekly flights between Germany, Austria, Switzerland, and Italy from the winter season. Following the closing of a major investment deal between Etihad Airways (EHD) and (ALI) in August, (EHD) (CEO) James Hogan said he wanted to strengthen Milan as a hub in Northern Italy and connect networks there with (BER) and (ALI).

(EHD) has a 29.21% stake in (BER) and a 49% stake in (ALI).

Hogan said he hopes to gain European Union (EU) regulatory approval for the (ALI) investment deal “in 60 to 90 days.” The long-mooted deal between (EHD) and (ALI) came to fruition August 8 in a complex transaction worth €1.75 billion/$2.35 billion, which saw (EHD) take a 49% stake in (ALI) for €387.5 million.

From October 26, (BER)’s 3x-daily flights from Düsseldorf and a double daily from Berlin Tegel Airport will operate into Milan Linate instead of Malpensa. In addition, the 3x-daily flights from Vienna, operated by Austria-based (BER) subsidiary, Niki (NKI), will also be directed to Linate.

The partners also agreed on selective code shares beyond their home hubs. (ALI) will place its “AZ” code on some of (BER)’s domestic flights (such as from Munich to Cologne, Düsseldorf, Hamburg, and Berlin). (BER) will place its “AB” code on selected domestic and international (ALI) flights via Rome and Milan Linate to destinations including Naples, Brindisi, Reggio Calabria, Alghero, Athens or Malta as well as on some of (ALI)’s long-haul flights to S America (such as São Paulo and Rio de Janeiro). Code sharing on (ALI)’s long-haul and some international connections will commence after regulatory approval. (BER) and (ALI) have also signed a frequent flyer agreement allowing passengers to earn and redeem bonus miles on the entire route network of both airlines on a reciprocal basis on flights from November 1. Both (BER) and (ALI) will remain members of the Oneworld (ONW) and SkyTeam (STM) alliances, respectively.

Further synergies will arise from optimized airplanes rotation and avoidance of expensive overnight airplane stops.

Recently, German aviation authorities denied the continuation of the two carriers' 24 code share routes between Germany and Abu Dhabi for the coming winter schedule, effective at the end of October.

News Item A-2: The 3rd quarter was notable for Etihad Airways (EHD) and Alitalia (ALI) signing a transaction implementation agreement, which, subject to regulatory approval, will result in a €1.76 billion/$2.25 billion investment in the struggling Italian flag-carrier (ALI). (EHD)’s investment will be complemented by a €300 million investment from existing core (ALI) shareholders, up to €598 million in financial restructuring of debt, and €300 million of new loan facilities.

Etihad Airways (EHD)’s plan to take a 49% shareholding in Alitalia (ALI) will dilute Air France (AFA)’s stake in (ALI) to <1%, according to (AFA) - (KLM) (CFO), Pierre-François Riolacci.

Etihad Airways (EHD) sees (ALI) as providing the transatlantic component of its growing global network.

Alitalia (ALI) and Etihad Airways (EHD) have unveiled 2 A330-200s in a unique "Expo Milano 2015" livery to mark their co-sponsorship of the global event. Expo 2015 will be held in Milan from May 1, 2015 to October 31, 2015 with an estimated 20 million visitors expected to attend the event of which >3rd will travel to the northern Italian city by air. The airlines held joint simultaneous events at Malpensa Airport in Milan and Abu Dhabi Airport to unveil the 2 A330-200 airplanes, to audiences gathered in both locations as well as thousands watching online around the world. SEE ATTACHED PHOTO - - "ALI-2014-10 - EXPO MILANO 2015 A330-200."

News Item A-3: Alitalia (ALI) begins Rome (FCO) - Marseilles Airbus A319 service on October 26.

News Item A-4: The European Commission (EC) is seeking input into whether SkyTeam (STM) Alliance members Delta Air Lines (DAL), Air France (AFA) - (KLM) and Alitalia (ALI) have unfair dominance on their transatlantic New York services.

This marks the latest step in a probe that was formally opened by the (EC) in January 2012. The investigation originally looked at whether all SkyTeam (STM) Alliance carriers had transatlantic market dominance, but later dismissed 8 other alliance members to focus on just (AFA) - (KLM), Alitalia (ALI), and Delta (DAL). “The 3 airlines have offered to make landing and takeoff slots available at both ends of the Amsterdam - New York and Rome - New York routes to facilitate the market entry of competitors,” the (EC) said, inviting comments from 3rd parties within a month of publication in the "Official Journal." (AFA) - (KLM), (ALI) and (DAL) are also willing to allow rivals to sell tickets on their flights, facilitate connections and give access to their frequent flyer program on all 3 routes. “If the market test confirms that the proposed commitments remedy the competition concerns, the (EC) may make them legally binding on the companies,” the (EC) said.

The (EU) body is concerned that the “extensive cooperation” between (AFA) - (KLM), (ALI), and (DAL), which includes profit-sharing, as well as schedules, pricing and capacity coordination, could be pushing up premium fares between Paris and New York, in addition to premium and non-premium fares on the other two routes.

News Item A-5: Alitalia (ALI) may eliminate close to -1,000 jobs following an agreement between airline management and its trade unions, according to an Italian news agency report.

"Adnkronos" reported that redundancy notices would go out from October 31 to 994 personnel (879 ground staff (MT), 61 pilots (FC) and 54 cabin crew (CA)). It said the deal had been signed over the weekend by the company and 3 of its 4 main unions. Cutting staff numbers was a central demand of Etihad Airways (EHD), which is taking a 49% stake in the loss-making (ALI) in a deal worth €1.75 billion/$2.35 billion. It still must receive final regulatory approval. (EHD)’s investment will be provided through a combination of equity injections, asset purchases and other financing facilities, and funding arrangements to restructure Alitalia (ALI)’s balance sheet.

News Item A-6: Italy’s Rimini airport is expected to close November 1 for an undetermined period, following the bankruptcy of its owners.


November 2014: Alitalia (ALI) has announced plans to serve its Etihad Airways (EHD)’s Abu Dhabi home base from Milan Malpensa and Venice, plus an expanded code share with its new equity partner covering 46 routes. Effective March 29, 2015, (ALI) will add daily Abu Dhabi flights from both Italian cities. The Milan Malpensa-originating service will be operated using Boeing 777s, while Venice will be served by Airbus A330s.

The routes, which will join (ALI)’s existing Rome Fiumicino - Abu Dhabi link, remain subject to regulatory clearances. This will take (ALI) to a total of 42 round-trip flights between Italy and Abu Dhabi.
“By tripling our flights to Abu Dhabi, passengers from N Italy can reach many SE countries in the world with convenient code shared flights on Etihad Airways (EHD). Connections between Italy and the United Arab Emirates (UAE) have never been so strong. We decided to focus our efforts in expanding our flights in N Italy, where the best of Italy’s industry resides,” (ALI) (CEO) Gabriele Del Torchio said.

The new links will be operated in code share partnership with (EHD), which also operates its own daily, Abu Dhabi - Milan Malpensa flight.

Both airlines already code share on each other’s daily services between Abu Dhabi and Rome, and subject to government approval, (EHD) will add its designator to 15 of (ALI)’s domestic routes from Rome Fiumicino Airport next year.

The extended partnership comes just days after (EHD) secured European Union (EU) clearance to acquire 49% of (ALI).

December 2014: News Item A-1: Alitalia (ALI) and Etihad Airways (EHD) have completed formalities related to transferring operations from the “old” Alitalia (ALI) to the new Alitalia Società Aerea Italiana (SAI) (ALI).

Alitalia (SAI) (ALI) has been set up as a corporate entity in which (EHD) has acquired its 49% equity stake. Assets and liabilities have been transferred to enable (ALI) to maintain its operations.

The 2 airlines announced in June that (EHD) would take the 49% stake for €387.5 million/$472 million, which has now been paid. This is just part of a much larger €1.75 billion deal between the 2 carriers.

The remaining 51% shareholding is held by Alitalia (CAI) through its MidCo vehicle, which has contributed the agreed assets and liabilities for the continuation of the airline. The transaction will become effective December 31, 2014 and Alitalia Società Aerea Italiana (SAI) (ALI) will commence operations January 1, 2015.

When the long-mooted deal was announced, it was regarded as the last, best chance for the perennially loss-making Italian national carrier (ALI) to remain in existence. Despite a bailout almost exactly a year ago, that was regarded as a stop-gap and observers feared that Alitalia (ALI), one of the world’s best-known airline names, would run out of cash at some point in 2014.

Since the deal was finalized, there has been a major clear-out of senior Alitalia (ALI) management, with ex-Etihad (EHD) personnel stepping in to several positions. The revived carrier will place much greater emphasis on long-haul services, while scaling back short-haul operations, which have been badly affected in recent years by low-cost carriers (LCC)s.

News Item A-2: Alitalia (ALI) and Etihad Airways (EHD) have finalized the board of directors for the “new” (ALI), with former Ferrari Chairman Luca Cordero di Montezemolo serving as non-Executive Chairman. (ALI) (which will be 49% owned by Etihad (EHD)) is set to be re-launched January 1, 2015, after the (EHD) - (ALI) equity deal formally closes on December 31.

The new board will include 9 directors, 5 appointed by (ALI), 3 appointed by (EHD) and 1, the new (CEO), jointly appointed. As previously announced, (ALI)'s (CEO) from January 1 will be Silvano Cassano, who previously was (CEO) of shipping company, Grandi Navi Veloci and fashion brand, the Benetton Group.

Etihad (EHD) (CEO) James Hogan will be (ALI)’s non-Executive Vice Chairman. Former (IATA) (CEO) & Director General Giovanni Bisignani will serve as a non-Executive Director on the new board, which will be appointed for a term of 3 years.

Cassano said, “The re-launch of (ALI) is going to be an extremely challenging and exciting project.”

Hogan added, “We have a vision and a sound business plan to establish the right foundations for a sustainable and profitable company, and an efficient operation which will provide Italian travelers with improved connections worldwide, drive increased inbound tourism into the country, and safeguard thousands of Italian jobs.”

Building on its recent change of ownership and new board, (ALI) has released details of its new C-level management team, which includes 3 veterans from new shareholder, Etihad Airways (EHD).

The appointments, which become effective January 1, cover the roles of (CFO), (COO), (CCO), Chief People & Performance Officer, Chief Customer Officer, and Chief Planning & Strategy Officer. Recruitment continues for a (CIO). All of the positions will report to new Alitalia (ALI) (CEO) Silvano Cassano.

3 of these core management positions ((CFO), Chief Customer Officer, and Chief Planning & Strategy Officer) will be held by former (EHD) employees. Duncan Naysmith, who is currently (EHD) VP of financial reporting, has been named as (ALI) (CFO), with responsibility for Finance, Treasury, Supply Chain & Property. He will be joined by (EHD) VP Guest Services, Aubrey Tiedt, who is taking on the newly-created role of (ALI) Chief Customer Officer (CCO). (EHD) veteran, John Shepley is coming in as (ALI) Chief Planning & Strategy Officer. In this wide-ranging role, he will take on responsibility for Pricing, Capacity & Revenue Management, Route & Network Planning, Alliances & Fleet. Shepley’s (CV) also includes previous senior executive roles with Jetstar Airways (IMU) and Gulf Air (GUL).

Internal candidates have been recruited for the positions of (COO) and Chief People & Performance Officer. Former (ALI) deputy General Manager Business, Giancarlo Schisano will become (COO) under the revamp, overseeing Operational Performance, Safety & Security, Flight Operations, Engineering & Maintenance, Ground Operations, and Quality. Schisano has been with (ALI) since 2005 and his roles have included Executive VP cargo. Meanwhile, former (ALI) Executive VP Human Resources (HR), Antonio Cuccuini will move into a similar role as Chief People & Performance Officer. He will manage (ALI)’s (HR) function, including People Development, Compensation, Benefits, Labor Cost Planning & Controlling.

There is also one external candidate in the new line-up. As previously announced, Ariodante Valeri became (ALI) (CCO) on October 1, joining from his former role as General Manager at Italian ferry firm Grandi Navi Veloci. Valeri is in charge of (ALI)’s Sales & Marketing operations. New Alitalia (ALI) (CEO) Cassano also joined (ALI) from Grandi Navi Veloci.

Following a recent €1.8 billion/$2.2 billion capital injection, which saw (EHD) take a 49% stake in (ALI), the new leadership has been tasked with turning (ALI) into a competitive, sustainably profitable business from 2017.

“Our new management team consists of seasoned, world-class executives with the experience, skills and determination needed to bring our ambitious turnaround strategy to fruition. Together, we will work with our stakeholders, employees, trade unions and the government to ensure that the unprecedented opportunities being presented through (ALI)’s recapitalization are fully realized,” Cassano said.

News Item A-3: Alitalia (ALI) has strengthened its position in the German market, launching weekly E175 services from three Italian airports (Milan Linate (LIN), Rome Fiumicino (FCO) and Venice Marco Polo (VCE)) to 2 points in Germany (Berlin Tegel (TXL) and Düsseldorf (DUS)). The longest sector of the 6 is the 1,199 km route between Rome Fiumicino and Berlin Tegel, while the shortest sector is the 676 km service from Milan Linate to Düsseldorf.

Milan Linate (LIN) to Berlin Tegel (TXL) vs airberlin (BER) 13x-weekly, to Dusseldorf (DUS) vs (BER) 16x-;
Rome Fiumicino (FCO) to (TXL) vs (BER) 7x-, Vueling (VUZ), and Germanwings (RFG); to (DUS) vs (BER) 7x-, and (RFG);
Venice Marco Polo (VCE) to (TXL) vs (BER) 2x-; to (DUS) vs (BER) 4x-, and (RFG) 3x-.

January 2015: News Item A-1: Alitalia (ALI) is targeting a 2017 profit under a new plan. (ALI) can have a great future, but attitudes in the company must change, the company said.

News Item A-2: Alitalia (ALI) selected Sabre technology to help drive its newly announced “Reinventing Alitalia” modernization program. Under the long-term agreement, (ALI) will migrate to Sabre’s integrated, Software-as-a-Service (SaaS) platform for all critical airline operations, including its industry-leading SabreSonic Customer Sales & Service (CSS) passenger reservations system.

News Item A-3: 2 A330-202s (1123, EI-EJG; 1135, EI-EJH) leased to Alitalia (ALI).

February 2015: News Item A-1: Etihad Airways (EHD) has acquired 75% of Alitalia (ALI)’s "MilleMiglia" frequent flyer program (FFP), valued at €112.5 million/$129 million, marking its 3rd loyalty scheme stake.
“The investment is part of the recapitalization and restructuring of Alitalia (ALI), which provides (ALI) with a sound financial platform for its future growth,” (ALI) (CEO) Silvano Cassano said.

With this latest deal, Etihad (EHD) operates (FFP)s for 7 carriers and has majority stakes in 3 (FFP)s beyond its own "Etihad Guest" program. These comprise airberlin (BER)’s "topbonus," (ALI)’s MilleMiglia, and Jet Airways’ "JetPrivilege" loyalty schemes.

(EHD) acquired 75% of MilleMiglia owner, (ALI) "Loyalty," through its Global Loyalty Company (GLC). (ALI) has retained the remaining 25% stake. (EHD) President & (CEO) James Hogan said this marks “a fundamental part” of (EHD)’s investment in (ALI), giving (GLC) “true global scale and a critical mass of valuable, high-spending consumers.” MilleMiglia has 4.6 million members, taking (EHD) to a total of 14 million members across its 4 loyalty programs (Etihad Guest, topbonus, JetPrivilege and MilleMiglia).

“The loyalty program sector is a faster growing and higher margin business than the airline industry. Importantly, this investment also ensures MilleMiglia’s members will benefit from exciting long-term plans to develop Global Loyalty Company into a broader, multi-partner loyalty program across the core markets of Italy, Germany, India and the United Arab Emirates (UAE),” Hogan said.

(EHD)’s network of equity partners includes airberlin (BER), Air Serbia (JAT), Air Seychelles (ASY), Alitalia (ALI), Etihad Regional operated by Darwin Airline, Jet Airways (JPL) and NIKI (NKI).

News Item A-2: Alitalia (ALI), which recently became an Etihad Airways (EHD) equity partner, will resume services to S Korea after 20-years, and has detailed plans to serve 2 destinations in China.

(ALI) will add Rome - Seoul on June 4 and Milan Malpensa – Shanghai as a special service for Expo Milan 2015, which runs from May 1 - October 1. (ALI) will also resume flights to Beijing by the end of 2015, serving the city from Rome.

Rome - Seoul and Milan Malpensa - Shanghai will both be 3x-weekly Airbus A330 services. “This is a major investment aimed at encouraging incoming tourism, which will support Italian exports in the East, as well as the city of Milan and Expo 2015. But above all, with these new flights, we keep our commitment to revitalize (ALI) by increasing intercontinental flights and destinations,” (ALI) (CEO) Silvano Cassano said.

In 2013, trade between Italy and China stood at around €33 billion/$37.6 billion and trade with South Korea was around €7.5 billion.

Under its 2014 - 2015 winter schedule, (ALI) flies 123 routes to 83 destinations, including 26 in Italy and 57 international points.

March 2015: News Item A-1: Alitalia (ALI)'s new executive team and strategic investors are determined to reinvent Alitalia (ALI).

(ALI) will introduce new routes, new product and service standards, a new cost management strategy, and new branding as the foundations to build a premium global airline representing the best in Italy. The energies, passion and expertise I have experienced at Altalia (ALI) in recent weeks do not leave any doubt that the airline we're unveiling will become once again a premium Italian airline recognized worldwide," said Luca di Montezemolo Chairman.

"Our priority is to put the customer at the center of everything we do. And to do that, we will change many things starting with the way we work. We need to work as one united team to achieve this great common goal. The revitalized (ALI) we envisage and have started building, will be an asset to this country, and a driver to support the growth of our tourism and our business."

Silvano Cassano (CEO) of (ALI) added "A successful (ALI) means more jobs, it means trade and it means tourism. It means a major impact on the Italian economy."

James Hogan (CEO) of Etihad Airways (EHD) and one of (ALI)'s major investors, said a clear deadline has been set for (ALI) to deliver profitability by 2017.

Milan Malpensa will increase long-haul services, while Milan Linate will increase connectivity with partner airline hubs. Rome Fiumicino will grow long-haul flying and continue to expand short and medium-haul flying.

New routes from Rome include Berlin, Dusseldorf, San Francisco, Mexico City, Santiago, Beijing, and Seoul, with increased flights to New York, Chicago, Rio de Janeiro and Abu Dhabi.

There will also be increased connectivity with Etihad Airways (EHD)'s hub in Abu Dhabi. With daily services from Venice, Milan, Bologna, and Catania, as well as additional flights from Rome.

News Item A-2: Alitalia (ALI) pilots (FC) and flight attendants (CA) planned to strike March 20th between 10 am and 6 pm local time. The walkout was called by the pilot (FC) union (ANPAC) in response to “unsatisfactory” responses from the company regarding Flight Operations and Social Security provisions since its merger with Abu Dhabi’s Etihad (EHD) last year. At the end of December 2014, (EHD) took a 49% share in (ALI), the Italian flag carrier.

The union is also planning a 24-hour strike on May 7.

April 2015: News Item A-1: "Will Alitalia be next to leave the Association of European Airlines (AEA) fold?" by Karen Walker in (ATW) Editor's Blog, April 21st, 2015.

With news that now airberlin (BER) is leaving the Association of European Airlines (AEA) in the spreading dispute over what is “fair” competition by the major Gulf carriers, the question is whether Alitalia (ALI) will be next out of the (AEA) door?

Etihad Airways (EHD) purchased a 29% stake in airberlin (BER) in December 2011; as such, (BER) is one of constellation of equity partner airlines that Abu Dhabi-based (EHD) has created. Other equity partners include Aer Lingus (ARL) (2.9%), Air Serbia (JAT) (49%), Air Seychelles (ASY) (40%), India’s Jet Airways (JPL) (24%), and Virgin Australia (VOZ) (22%).

Alitalia (ALI) joined the constellation in August 2014 when (EHD) acquired a 49% stake in the Italian flagship. (ALI) is an (AEA) member, but it may now be under pressure to leave. British Airways (BAB) and Iberia (IBE) both quit (AEA) in March over the same issue; Qatar Airways (QTA) has a 10% stake in their owner, (IAG).

In the USA, Airlines for America (A4A) has so far taken a neutral stance, even though 3 of its members, American Airlines (AAL), Delta Air Lines (DAL), and United Airlines (UAL), are the carriers that started the whole anti-Gulf carrier campaign. They commissioned a report alleging that Emirates (EAD), Etihad (EHD) and Qatar (QTA) benefit from >$40 billion in state subsidies. But some (A4A) members (most notably and publicly FedEx (FED)) are against the campaign. JetBlue Airways (JBL) has also said that for small carriers like itself, partnerships with the Gulf carriers provide important feed and allows them to extend their networks internationally in a way that would not otherwise be possible.

It’s all building up to what could be a very interesting association event (indeed the biggest association event of them all) the (IATA) (AGM) in June. The meeting will be in Miami this year (the 1st time in many years that it has been staged in the USA (last year it was in Doha and Qatar Airways (QTA) was an excellent host). Of course, there is nothing on the preliminary (AGM) agenda or media program related to the Gulf carrier dispute, but without question this is bound to surface in 1 form or another, and be a topic of conversation in private meetings and during networking breaks. But (IATA), you can be certain, will maintain a highly diplomatic and neutral stance even as some of its most prominent member airlines duke it out.

I can’t wait.

May 2015: News Item A-1: Alitalia is to end its Air France (AFA) - (KLM) partnership in 2017.

Etihad Airways (EHD) equity partner, Alitalia (ALI) will not renew its long-standing agreements with Air France (AFA) - (KLM), when they come up for renewal in January 2017, saying the relationship is imbalanced.

The (AFA) - (KLM)/Alitalia (ALI) tie-up covers passenger services between France, Italy, the Netherlands and beyond (as well as the marketing, sales and distribution of (ALI)’s belly capacity, currently performed by (AFA) - (KLM).

(ALI) said the (AFA) - (KLM) partnership and ancillary joint venture (JV) agreements were signed “under very different economic circumstances” in 2009 and 2010, before being transferred to the new (ALI) in January 2015. As part of this transition, Etihad Airways (EHD) took a 49% stake in Alitalia (ALI). (AFA) used to be a key (ALI) shareholder, but now holds <1% of (ALI).

“These agreements are no longer beneficial, either commercially or strategically, to the new (ALI) and its ambitious turnaround plan. They were negotiated when (ALI) was in a very different position, with the result that the agreements in their current forms favor the other party,” (ALI) (CEO) Silvano Cassano said.

He added the agreements are “undermining” (ALI)’s efforts to restructure its network, aimed at winning back traffic and supporting the Italian manufacturing industry’s cargo needs.

As part of its reinvention, (ALI) has joined (EHD)’s network of equity partners that includes airberlin (BER), Air Serbia (JAT), Air Seychelles (ASY), Etihad Airways (EHD), Etihad Regional operated by Darwin Airline, Jet Airways (JPL), and NIKI (NKI).

“We have indicated to (AFA) - (KLM) that we are willing to discuss more equitable arrangements that benefit all the parties involved, but thus far, we have been unable to achieve this result. We remain open to further discussions to achieve a mutually acceptable solution. However, in the interest of transparency, and certainty for all parties, we felt it necessary to announce our intention not to renew these agreements under the present conditions,” he said.

It is unclear what, if any, implications this announcement has for (ALI)’s SkyTeam (STM) Alliance membership and its transatlantic joint venture (JV) with Air France (AFA) - (KLM) and Delta Air Lines (DAL).

An (AFA) - (KLM) spokesperson said: “(AFA) - (KLM) is currently holding discussions with (ALI) to see how they can cooperate in the future in Europe. The agreements under the European (JV) between (AFA) - (KLM) and (ALI) still applies until January 2017.”

News Item A-2: A major fire at Rome’s Fiumicino Airport overnight May 6 - 7 led to closure of the airport and thousands of passengers being delayed. A spokeswoman at the Italian civil aviation regulator (ENAC), said the fire started in the transit hall of Terminal 3, near shops. Media reports have suggested it began in a restaurant shortly after midnight, local time. Video from the scene showed flames leaping from around 20 meters/66 ft of the 2nd floor of the terminal’s frontage. The spokeswoman said Terminal 3, which handles domestic and short-haul European services, was immediately closed. While the other 3 terminals had initially remained open, all flights to and from the airport were suspended. Around 12 incoming services in the small hours were diverted.

The main road to the airport was closed, as was the direct rail link from the center of Rome into the airport. Smoke was still rising from the affected building as dawn broke and pictures of the interior of Terminal 3 showed extensive damage. Alitalia (ALI) said it was switching all its check-in activities to Terminal 1 and had set up two task forces, of about 100 people, to provide assistance to arriving and departing passengers.

(ENAC) decided to restart departures from noon local time, although it warned that the airport’s return to normal operations would be gradual. It urged passengers to check with their airlines for any rescheduling that might be required, as arrivals would initially be “heavily limited to a few units per hour.” Schedules were likely to remain disrupted for the rest of the day.

(ALI) said it would only re-start departures from 2 pm and that all incoming flights, with the exception of a few intercontinental services, would also be canceled until that time.

Fiumicino’s online departure board showed at least 60 afternoon services were canceled, almost all of them Italian domestic or short-haul European services. There were also delays to some long-haul flights of up to three hours.

Given the several hours’ closure, many airplanes were likely to be out of position. (ALI) has organized a series of crew-only ferry flights to several destinations, including New York (JFK), Miami, Los Angeles, Chicago, Tel Aviv, and Moscow to remedy this.

June 2015: Alitalia (ALI) introduced a new brand, airplane livery and visual identity on an Airbus A330-200 as the Italian flag carrier revitalizes its business. It also announced product upgrades across all classes of service on its international wide body fleet.

(ALI), which joined Etihad Airways (EHD)’s network of equity partners at the end of 2014, is seeking to reinvent itself. “The new livery marks a major milestone in the history of one of the most iconic Italian brands in the world,” (ALI) Chairman Luca Cordero di Montezemolo said. “We have also unveiled the results of the outstanding work to create more comfortable interiors and to introduce a strong, innovative service culture. (ALI)’s livery is universally associated with Italy and viewed as iconic and highly recognized. However, it was clear that it needed to evolve to bring (ALI) into the 21st century in a way that could meet our ambitious objectives and the most demanding market expectations.”

After 46 years, Alitalia (ALI) said the green band will disappear from the fuselage for the first time. At the core of the new livery is a larger tricolor “A” tailfin. It also sports a more modern typeface and non-Italic style. A warm ivory fuselage “adds an element of Italian style and elegance to the scheme,” according to (ALI), and “a sense of speed is created by a refined series of bands progressively leading towards the rear of the airplane.”

(ALI) said the announcement follows a “highly successful first five months of partnership with minority shareholder, Etihad Airways (EHD), which has already seen >70,000 guests shared between the airlines on their growing code share operations. In addition to the revenue boost from new direct and code share routes, (ALI) will also benefit from widespread non-revenue synergies, which will be worth >$15 million in 2015. These synergies will be complemented by investment in shared technology solutions and ongoing sharing of ‘best practice’ between both airlines.”

Starting from today, Wi-Fi connectivity will progressively be made available on all long-haul airplanes, together with revamped movie galleries and in-flight entertainment.

(ALI) (CEO) Silvano Cassano said, “The business is now entering a new era. Our current investment in training is unprecedented in the history of (ALI), involving thousands of (ALI) people, to ensure they have the tools to deliver the highest standards in the industry.”

(EHD) (CEO) James Hogan said, “The old (ALI) was a great brand, but a challenged business. Now we are well on the way to seeing the rebirth of this iconic airline, in a new era of commercial success. “The steps taken by (ALI)’s senior management team over the last five months are to be applauded. What we see here today is a business growing in confidence. The future is bright for the new (ALI).”

The A330-200 airplane in the new livery will operate its 1st flight from Rome to Abu Dhabi on June 5 and return back to Milan.

2 A330-202 (825, I-EJGA; 831, I-EJGB), Etihad Airways (EHD) leased.

July 2015: Pilots (FC) and flight attendants (CA) at Alitalia (ALI) went on strike across the country on July 24, forcing (ALI) to cancel flights at the start of 1 of the busiest holiday weekends of the year.

The Anpac union called the 24-hour stoppage to push management to give guarantees over staffing levels and harmonize pay levels following Gulf carrier Etihad Airways (EHD)'s purchase of a 49% stake in loss-making (ALI) last year.

(ALI) cancelled 15% of July 24's scheduled flights and accused unions of showing a "lack of respect" to passengers, with the strike coming just as Rome's main Fiumicino airport struggles to return to full capacity after a fire in May.

The strike has dealt a fresh blow to Italy's troubled transport system and follows weeks of chaos on the Rome metro, where drivers are staging wildcat strikes to protest at new requirements that they clock in and out of work.

September 2015: News Item A-1: Alitalia (ALI) recorded a 2015 1st-half net loss of -€130 million/-$144 million. (ALI)’s board described the results as “in line with business plan forecasts” and a “slight improvement” on expectations. However, it cautioned that its turnaround strategy needed to be implemented promptly to improve the financial situation.

The results follow (ALI)’s September 18 announcement that (CEO) Silvano Cassano will step down, effective immediately. Chairman Luca Cordero di Montezemolo is filling the role until the board appoints a new (CEO).

(ALI) said losses had increased in the 2nd quarter by some -€30 million compared to the 1st quarter. 1 factor affecting the results was the major fire at Rome Fiumicino Airport in May, which seriously damaged Terminal 3, disrupting international services. (ALI) said the disruption had cost it some €80 million, spread over the 2nd and 3rd quarters. It has previously said it is attempting to retrieve the €80 million in compensation from the airport authorities.

Another detrimental factor in the financial figures was the suspension of its important Rome - Caracas route, due to the long-running problem of the Venezuelan authorities blocking repatriation of USA dollar revenue. During the 1st half, (ALI) carried 10.3 million passengers, recording a 75% LF load factor.

The directors welcomed the success of a €375 million bond issued by the company and of the $700 million raised by Etihad Airways (EHD) and its equity partners, of which (ALI) will receive $122 million.

In line with the company’s shift from short-haul to intercontinental services, the 1st half saw it launch a series of long-haul routes: Venice - Abu Dhabi, Milan - Abu Dhabi, Milan - Shanghai and Rome - Seoul services, the 1st 2 recognizing the importance of 49% stakeholder, Abu Dhabi-based Etihad Airways (EHD).

News Item A-2: Alitalia (ALI) confirmed that (CEO) Silvano Cassano has stepped down. Cassano, who left (ALI) for personal reasons, formally tendered his resignation to the board of directors on September 18. Chairman Luca Cordero di Montezemolo is filling the role until the board appoints a new (CEO).

Cassano had been named (CEO) of the “New Alitalia” in September 2014 after (ALI) closed a major investment deal with Etihad Airways (EHD) to hopefully return (ALI) to profitability. Under Cassano’s leadership, Alitalia (ALI) began the 1st stage of its business transformation program.

The long-mooted deal between Etihad Airways (EHD) and Alitalia (ALI) came to fruition August 8, 2014 in a complex transaction worth €1.75 billion/$2.35 billion, which saw (EHD) take a 49% stake in (ALI) for €387.5 million.

In June 2015, (ALI) introduced a brand new aircraft livery and visual identity on an Airbus A330-200 as (ALI) revitalized its business. It also announced product upgrades across all classes of service on its international wide body fleet.

“We now aim to move into the next phase of our business transformation strategy under new leadership,” Montezemolo said.

“The company will announce a new (CEO) in due course. In the interim, Mr Cassano’s daily responsibilities will be split between Alitalia’s (COO) Giancarlo Schisano and (CFO) Duncan Naysmith, with both reporting directly to me, until the new (CEO) is appointed,” Montezemolo said.

News Item A-3: Alitalia (ALI) has reconstituted its pilot (FC) training center after a 10-year gap, with 24 prospective pilots (FC) due to embark on a 2-year training course by the end of 2015.

>550 candidates applied for the course. The successful applicants, aged 18 - 27 years, will enroll on the joint Alitalia (ALI) - Etihad Airways (EHD) Cadet Pilot program, based at locations throughout Italy and Abu Dhabi. If they successfully complete the course, the cadets will become pilots (FC) at CityLiner, Alitalia (ALI)’s regional airline, which operates 5 Embraer E190 and 15 Embraer E175 regional jets. The new pilots (FC) will commit to flying for Alitalia (ALI) for at least 3 years.

“Today is an important day for Alitalia (ALI) and the Italian civil aviation sector as a whole, whose track record for the training of airline pilots is recognized around the globe,” (ALI) Chairman Luca Cordero di Montezemolo said.

“Training and investing in young people is a commitment which Etihad Airways (EHD) shares with Alitalia (ALI),” he said.

“By ensuring that these talented cadets are exposed to the best pilot training at our world-class facilities in Italy and in the (UAE), we guarantee our continued access to a pool of highly skilled aviators well into the future,” Etihad Airways (EHD)’s President & (CEO) James Hogan added.

The development is the latest in a series of moves involving pilot (FC) training and secondment between (ALI) and (EHD).

The Alitalia Training Center for Pilots (FC) has a 60-year history, during which it trained thousands of Italian pilots (FC). It re-opened following a go-ahead from (ENAC), Italy’s civil aviation regulator, which reviewed and endorsed the training course.

The 1st 8 cadet pilots (FC) have already left for Abu Dhabi. The 1st part of the course is dedicated to theoretical and practical classwork, followed by the 1st training flights at the Etihad Flight College in Al Ain, an hour's drive from Abu Dhabi.

The 2nd part the course will be held at the Alitalia Training Academy at Rome Fiumicino, which is equipped with 7 flight simulators.

To assist cadets with the cost of pilot (FC) training, (ALI) is making a contribution to each trainee, investing a total of >€1 million/$1.1 million. Previously, pilot trainees were expected to shoulder the cost of training themselves. (ALI) has also agreed with Italy’s UniCredit financial group to offer cadets a bespoke loan scheme.

Alitalia (ALI) and Etihad (EHD) are planning more cadet pilot programs to meet anticipated future growth and demand.

October 2015: News Item A-1: Alitalia (ALI) has confirmed its 3-year business plan is on track for profitability by 2017 and revealed details on new initiatives it will introduce in the next few weeks.

(ALI) will also launch new flights from Rome Fiumicino to Santiago, Chile, from May 2016, and to Mexico City from June 2016. This brings its number of Latin American routes to 5 and 10 in the Americas.

In September, (ALI) reported a 2015 1st-half net loss of -€130 million/-$144 million. (ALI)’s board described the results as “in line with business plan forecasts” and a “slight improvement” on expectations. However, it cautioned a turnaround strategy must be implemented promptly to improve the financial situation. During the 1st half, (ALI) carried 10.3 million passengers, recording a 75% LF load factor. “For the 1st time since 2009, the load factor for the 3rd quarter [2015] exceeded >80% LF and we are on track to meet our objective of reaching profitability by 2017,” Chairman Luca Cordero di Montezemolo said.

“(ALI) is ascending, but it still has challenges and to maintain momentum, we need to accelerate cultural and operational change at every level within the company,” Vice Chairman & (EHD) President & (CEO) James Hogan said, adding that being part of Etihad Airways Partners will help (ALI) succeed in its drive to profitability.

(ALI) will add new services for business customers and make a significant investment in ground services at Rome Fiumicino Airport. The interiors of medium- and long-haul aircraft will be completely retrofitted with leather seats and new cabin refurbishments. The program will start in November and will be completed in spring 2016. Long-haul aircraft restyling, where the business class seats will be made of Poltrona Frau leather, will be completed by the fall of 2016.

Internet and email connectivity services (already underway on the long-haul fleet) will be extended to the entire (ALI) fleet, including medium-range aircraft.

(ALI) will also implement new VIP lounges and complimentary chauffeur for business (C) class customers.

Additionally, (ALI) is evaluating options to expand its long-haul fleet, which will increase long-haul capacity >20% year-over-year.

Shortly, a new 2,000 sq m Alitalia (ALI) Excellence Training Center will be inaugurated.

News Item A-2: See video:

"ALI-2013-10 - Mimi Ikonn Vlog, When in Rome.jpg."


News Item A-3: Air travel to and from Italy will be heavily affected as air traffic controllers planned to go on an 8-hour strike on October 24. The strike, called by the pilots (FC) and air traffic controllers union, Associazione Nazionale Professionale Aviazione Civile (ANPAC), was planned from 10 am to 6 pm local time.

November 2015: Alitalia (ALI) has added Venice - Dusseldorf service to its winter schedule. It has been launched, as well as more flights to Berlin and Frankfurt from Milan Linate.

December 2015: News Item A-1: Airberlin (BER) and Alitalia (ALI) will extend their cooperation on several routes between Germany and Italy starting from summer schedule 2016 onward.

(BER) will operate 3x-daily services from Düsseldorf to Bologna, starting May 2. Existing services from Düsseldorf to Venice and Florence will be expanded from 1x- to 3x-daily frequencies. All flights are expected to be integrated into the existing code share agreement with Alitalia (ALI) soon.

(BER) and (ALI) are both strategic equity partners of Abu Dhabi-based Etihad Airways (EHD).

Starting May 2, (BER) will also operate 3x-daily, Düsseldorf - Stockholm Arlanda flights. Services from Berlin Tegel to Gothenburg and Copenhagen will be expanded to include a 4th daily flight.

From March 27, (BER), the Oneworld (ONW) Alliance member will re-launch daily, Berlin Tegel - Sofia (Bulgaria) service. Berlin Tegel - Budapest will see 1 additional flight, taking the total to 3x-daily. Starting from May, Düsseldorf - Barcelona will become 2x-daily services, up from daily.

News Item A-2: Alitalia has named Cramer Ball as (CEO) from early March 2016. Ball is a former (CEO) of India’s Jet Airways (JPL) and Air Seychelles (ASY)) 2 airlines where he led substantial transformation programs. He follows Silvano Cassano who resigned for personal reasons in September after only 1 year as (CEO) of the “New Alitalia.”

“I believe Cramer is the right person to continue leading the development and implementation of our industrial plan, which is now well in motion, with a target to make the company profitable in 2017,” (ALI) Chairman Luca Cordero di Montezemolo said.

(ALI) became a strategic equity partner of Etihad Airways (EHD) in August 2014, after (ALI), the Italian flag carrier closed a major investment deal with (EHD) to return (ALI) to profitability. Under Cassano’s leadership, (ALI) began the 1st stage of its business transformation program.

In June 2015, (ALI) introduced a new brand, aircraft livery and visual identity on an Airbus A330-200, as (ALI) revitalized its business. It also announced product upgrades across all classes of service on its international wide body fleet.

In September, (ALI) recorded a 2015 1st-half net loss of -€130 million/-$144 million. (ALI)’s board described the results as “in line with business plan forecasts” and a “slight improvement” on expectations. However, it cautioned that its turnaround strategy needed to be implemented promptly to improve the financial situation.

News Item A-3: Alitalia (ALI) is rolling out a “major cabin refurbishment” across its fleet of 96 short- and mid-haul aircraft under a project due for completion by April 2016.

(ALI)’s Engineering & Maintenance department will be upgrading (ALI)’s Airbus (EDS) and Embraer (EMB) fleets, equipping them with leather seats, wood effect bulkheads and new colored headrests.

Around 4 aircraft per week will undergo the refit, which takes 5 days to complete. (ALI) has hired >130 new staff to speed up the process. “We have shifted from a typically technical type of refurbishment, which relied more on functionality, airworthiness and acceptable aesthetics, to a new focus on customers and higher levels of service,” Alitalia (ALI) VP Marketing Marco Martinasso said.

At the same time as the refit, the aircraft will be painted in (ALI)’s new colors, which were unveiled in June 2015.

(ALI) is also refurbishing its 24 long-haul aircraft. 6 have already been completed and the remaining will be completed by the end of 2016. “The lengthier time to complete the project is because of the size of the long-haul, wide-bodied planes needing a longer stay in the hangars than the short- and medium-haul fleets,” (ALI) said.

January 2016: Alitalia (ALI) and Air Seychelles (ASY) increased code share services, adding the AZ code on Air Seychelles (ASY) 3x-weekly, Paris (CDG) - Seychelles services.

April 2016: News Item A-1: "Alitalia Resumes China Flights with New Beijing Schedule" by (ATW) Jeremy Torr, April 15, 2016.

Alitalia (ALI) will resume direct flights to China with a new 4x-weekly service to Beijing, starting July 2016.

(ALI) described the move as “1 more step forward as [Alitalia (ALI)] proceeds with its long-haul network development plan.” The Beijing schedule will use 250-seat A330 aircraft in a 3-class cabin, and will feature a newly renovated cabin layout as well as in-flight Wi-Fi.

The Beijing schedule will complement 2 other long-haul routes to be introduced by Alitalia (ALI) this year: - Santiago, Chile in May 2016, and Mexico City in June 2016. In Asia, (ALI) presently flies daily services to Tokyo and Seoul.

(ALI) cut its previous Beijing schedule in March 2013 when it was struggling to keep afloat despite a €500 million/$675.9 million bailout plan, partly funded by the Italian government.

In 2014, Etihad Airways (EHD) took 49% of the airline with a cash injection of €560 million. At the time, (EHD) (CEO) James Hogan described (ALI) as “a great brand but a challenged business.”

Announcing the new schedule, (ALI) (CEO) Cramer Ball said the Beijing route “represents a crucial investment for Alitalia (ALI)” and said it was an important part of (ALI)'s long term plan to expand its long-haul network into strategic markets. "We are committed to strengthen our presence in the Far East,” he said.

News Item A-2: Italy’s air navigation services provider (ENAV) planned to strike on April 9, affecting air travel to and from Italy, Eurocontrol confirmed as it established a Notice to Airmen (NOTAM).
Overflights/arriving intercontinental flights are not affected, according to Eurocontrol.

Alitalia (ALI) said on its website it has “put into place a series of preventive actions in order to reduce any resulting inconvenience to its guests. In addition to the air traffic controller (ATC) strike, some ground personnel at Rome Fiumicino Airport also announced strike action, several Italian media reported.

May 2016: Alitalia (ALI) introduces new cabin attendant uniforms - see photo - "ALI-Cabin Attendants New Uniforms-2016-05.jpg."

June 2016: Italian air traffic controllers (ATC) will strike again Saturday, July 23, which could result in numerous flight cancellations during one of the busiest summer holiday travel days, European lobby group, Airlines for Europe (A4E) said on June 17. “It is unacceptable that airlines and their customers can be repeatedly punished by these unjustified strikes. The European Commission (EC) and governments must act immediately to protect the rights of millions of European travelers,” (A4E) Managing Director Thomas Reynaert said.

He added: “Later this month our member airlines’ (CEO)s will hold a Summit in Brussels on Air Mobility & Prosperity to discuss technological, operational and political means to minimize strike effects. It's time to take action.”

The latest (ATC) strikes in Greece, Italy, Belgium, and France since March have caused nearly 3,000 cancellations among (A4E) members and >1 million minutes of delay (>16,000 hours) across all airlines operating in European airspace.

In 2015, >10,000 flights operated by (A4E) members were affected by 28 days of (ATC) strikes in Europe, causing disruption to millions of passengers.

(A4E) is based in Brussels. Launched in January 2016, (A4E) airlines include Air France (AFA) - (KLM), easyJet (EZY), Finnair (FIN), the International Airlines Group (IAG), Jet2.com (JT2), the Lufthansa Group, Norwegian (NWG), Ryanair (RYR), and Volotea (VLZ), with plans to grow further.

January 2017: News Item A-1: "Alitalia Told to Present New Business Plan to Italian Government" by (ATW) Alan Dron alandron@adepteditorial.com, January 10 2017.

Alitalia (ALI) has been asked to present the Italian government with a detailed business plan agreed with creditors, banks and shareholders within the next few weeks as it again faces significant financial losses. A meeting in Rome on January 9 saw senior (ALI) executives (including (CEO) Cramer Ball, Etihad (EHD) Group Chairman James Hogan and representatives of 3 Italian banks who are shareholders or backers of the airline) meet with Economic Development Minister Carlo Calenda and Transport Minister Graziano Delrio.

Abu Dhabi-based Etihad Airways (EHD), which is a 49% shareholder in (ALI) the Italian flag carrier, stepped in to bail out the loss-making (ALI) in 2014. (ALI) is nearing the conclusion of a 3-year turnaround plan that was supposed to return it to profit this year, but is reportedly still losing money heavily.

The new business plan was approved by (ALI)’s board on December 22, with the airline spelling out the seriousness of the situation in a statement that said short-term funding had been agreed upon at a separate shareholders’ meeting.

This was “to allow the airline’s management team to begin negotiations in the next 60 days with key stakeholders (lessors, suppliers, distribution companies and trade unions) to seek their commitments to deep cost reduction measures to secure long-term support from the shareholders and the financial institutions with the aim to secure sustainability for (ALI).”

Ball went so far as to say: “The next 2 months are critical for (ALI). It is vitally important that (ALI)’s workforce and major stakeholders, such as corporate partners, suppliers and unions, embrace and accept the radical changes we need in order to gain the next round of significant funding from our shareholders, which will be crucial for our future.”

An (ALI) spokesman declined January 10 to comment further on the matter. According to the board, “The main focus of future activities will be to change our business model by:

* developing further the long-haul flight network;

* reworking the narrow-body business;

* reducing costs and improving productivity to match competitors;

* re-evaluating joint venture agreements;

* deepening existing airline partnerships and look to add new commercial relationships;

* leveraging recent large investments in technology to compete, and also drive additional revenue;

* reducing manpower numbers to create the ‘right size, right shape’ for the business.

“The ‘right size and right shape’ program will ensure that the organization can operate efficiently in a highly competitive environment, while minimizing redundancies and maximizing productivity. “No final decisions on staff reductions have yet been taken and the management team will now begin consultation with employees and their trade union representatives.”

Ball added: “We are committed to work positively with the unions and reach consensus on a new collective labor agreement. Their backing on the implementation of the next phase of the business plan is vital. We have achieved great progress in the last 2 years but the commercial aviation market is brutally unforgiving so we need to go further with our program of change. We need a business that is the right size, the right shape and with the right productivity and cost base. If we can deliver those, Alitalia (ALI) will succeed.”

News Item A-2: Alitalia (ALI) has terminated plans to take a major stake in neighboring national airline, Air Malta (MLT). Talks on (ALI) taking a shareholding in (MLT), which were scheduled to be completed in summer 2016, had become increasingly protracted. Maltese newspapers speculated last weekend that negotiations between (ALI) and the Maltese government, which owns the tiny Mediterranean island’s airline, had broken down.

On January 13, (ALI) said the companies “have jointly decided to terminate the talks, which would have led to (ALI) becoming a 49% shareholder in (MLT). “The two airlines agreed that the current changing landscape in the airline industry was not ideal for such a transaction and that both airlines would concentrate on the current challenges without entering into a partnership.”

(ALI), which is nearing the end of a 3-year turnaround plan, again faces significant financial losses. (ALI) has been asked to present a detailed business plan the Italian government later this month. It was added that Air Malta (MLT) and (ALI) would “continue to collaborate closely commercially through a recently launched, extensive code sharing program.”

News Item A-3: "Alitalia, the Airline that Broke the Camel’s Back?"
by Karen Walker in (ATW) Editor's Blog, January 24, 2016.

Can Alitalia (ALI) ever be a good-news story? It appears not for Etihad Airways (EHD), the Abu Dhabi-based airline that has become the latest in a line of companies to see potential in the Italian flag carrier but for whom "good news" seems an increasingly distant prospect.

The announcement that Etihad Aviation Group President (CEO) James Hogan and (CFO) James Rigney will step down later this year isn’t all about Alitalia (ALI), but Rome has a lot to do with what appears to be a major rethinking of Etihad (EHD)’s future.

The Etihad equity partnership strategy focused on smaller airlines such as Air Seychelles (ASY), Air Serbia (JAT), airberlin (BER), Virgin Australia (VOZ) and India’s Jet Airways (JPL) (now India’s 2nd largest carrier after Indigo (IGO)) that could provide feed to (EHD) and allow it to grow more rapidly and compete against its much larger (UAE) neighbor, Dubai-based Emirates (EAD).

Equity investments in the partner airlines are all minority stakes, although some are substantial: 40% in Air Seychelles (ASY) and 49% in Air Serbia (JAT).

But (ALI) was different for significant reasons. (EHD) took a 49% stake (worth some $470 million) in December 2014 in what was a major flag carrier brand, but one with a long history of loss making, labor disputes, bailouts and bankruptcies. Indeed, just a year before the deal was finalized, (ALI) was teetering once more on the edge of bankruptcy and was bailed out (only to be close to running out of cash again just 6 months later).

The Etihad (EHD) deal, which was a complex transaction worth €1.75 billion/$2.35 billion across its various facets, was yet another rescue of an airline infamous for its "dying swan" acts. There had been “Old Alitalia” and “New Alitalia” but never more than a fleetingly profitable Alitalia (ALI). This time, however, there was a plan. (EHD) would invest in, restructure and turn around (ALI) so that it would be profitable by 2017. And (EHD) and Hogan’s team has invested significant money, effort, resources and passion in that turnaround. This was probably the best chance (ALI) ever had.

But 2017 is here and, financially, (ALI) looks very much like the airline it has always been (a disaster). In early January, senior executives (including (ALI) (CEO) Cramer Ball, Hogan and representatives of 3 Italian banks who are shareholders or backers of the airline) met with Senior Economic Development & Transport Ministers as the Italian government demanded a detailed business plan.

Ball himself described the situation as critical, saying it was “vitally important that (ALI)’s workforce and major stakeholders, such as corporate partners, suppliers and unions, embrace and accept the radical changes we need in order to gain the next round of significant funding from our shareholders, which will be crucial for our future.”

Worse for (EHD), however, was that (ALI)’s troubles were not the only ones in the Gulf airline’s partnership galaxy. (BER) is losing money also, prompting a codeshare and wet-lease deal to be struck with former rival Lufthansa Group.

And, back home in the (UAE), these are also challenging times for the Gulf carriers. Lower oil prices, economic uncertainties and terrorist attacks have all weakened demand for tickets on the Middle East’s “big three” airlines even as they take deliveries of new aircraft. Competition between Etihad (EHD), Emirates (EAD) and Qatar (QTA) is cutthroat. That alone is enough of a challenge for any airline (CEO) (Hogan and his top team are also managing the crises that Alitalia (ALI) and airberlin (BER) have become.

Last year Hogan was given the new title of Group President & (CEO), allowing the installation of Peter Baumgartner as Etihad Airways (EHD) (CEO). That freed Hogan to address the broader partnership airline businesses, while (EHD) gained a dedicated (CEO). Next week, it is widely expected that Hogan and Lufthansa Group (CEO) Carsten Spohr will announce a closer relationship between the 2 companies. These are fixes that help reassure (EHD)’s (UAE) government owners.

But in the end, (EHD)’s owners want more change. “We must ensure that the airline is the right size and the right shape,” Etihad Aviation Group Chairman Mohamed Mubarak Fadhel Al Mazrouei said. “We must progress and adjust our airline equity partnerships even as we remain committed to the strategy.”

How that “adjustment” will play out will be interesting but it’s my bet there will be much more focus on the home carrier. For (ALI), it’s hard to see how anyone will again risk their back for what has to be the world’s most frustratingly, stubbornly, unfixable airline.

February 2017: Alitalia (ALI) will add daily, Rome to Mexico Boeing 777 service from July 3.

March 2017: Alitalia (ALI) will cease all flights from the southern Italian city of Reggio di Calabria in a move that will remove the majority of services from the city’s airport.

From March 27, (ALI) said it will halt its 56 weekly flights from Aeroporto dello Stretto, which serves Reggio on the “toe” of Italy. The airport overlooks the Straits of Messina, which separate mainland Italy from Sicily and give the airport its name.

(ALI) said its 38x-weekly flights to Rome Fiumicino, 14x-weekly to Milan Linate and 4x-weekly to Turin were heavily loss-making, turning in a deficit of €6 million/$6.4 million in 2016. It had tried for a year to find a way to maintain the services, but talks involving the Italian central government and local and regional authorities had been unsuccessful. “We are a commercially focused business and our decisions are made for economic reasons,” (ALI) (CEO) Cramer Ball said. “The Reggio Calabria services are losing money and that situation simply could not continue.”

(ALI) is about to present a new business plan to government ministers in its efforts to stem renewed losses. In recent years, its domestic and short-haul services have come under pressure from high-speed trains and low-cost carriers (LCC)s. “We have spent many, many months talking with the local and regional authorities to save these services, but unfortunately none of them were able to arrive at a solution. Alitalia (ALI) remains available to discuss with the relevant authorities any new scenario and measures to be implemented immediately in order to restore sustainable services to and from Reggio Calabria airport,” Ball said.

(ALI) said it had proposed moving services to and from the southern Italian city onto a Public Service Obligation basis (the European equivalent of USA Essential Air Services status) which allows for a subsidy to be paid without infringing on European Union (EU) competition regulations.

However, despite the support of the central government, its proposals “have not been answered by local authorities in charge, thus causing the inevitable end of (ALI) flights,” he said.

April 2017: News Item A-1: Alitalia (ALI) and labor unions reached a preliminary agreement on April 14 on job and pay cuts that (ALI) said are necessary to keep it in business, union and government officials said. The tentative deal, needed to unlock fresh financing for (ALI), will however have to be approved by (ALI) workers in a ballot to become valid.

After marathon talks on April 13, (ALI) and unions agreed to trim the scale of lay-offs among ground staff to around 1,700 from 2,037 previously envisaged, and reduce cuts to flight personnel wages to 8% from up to 30%. The government had hoped to win strong union backing for the plan by April 13 so that investors in (ALI), including Etihad Airways (EHD) with a 49% stake and Italy's top 2 banks Intesa Sanpaolo and UniCredit, could launch a cash call. That now looks likely to be delayed until after the workers' ballot.

"If the accord reached is approved by the workers, I imagine the shareholders will put the money in as planned," Industry Minister Carlo Calenda said. The financing package for (ALI) is worth EUR2 billion/US$2.1 billion, including an emergency cash injection of EUR400 million to keep it afloat if the rescue plan does not work out as expected.

The EUR400 million financing is set to be split in half between (EHD) and the banks. Calenda said the government was ready to guarantee the EUR200 million to be provided by UniCredit and Intesa, as they have requested.

News Item A-2: "Alitalia Nears Bankruptcy as Staff Rejects Rescue Plan" by (ATW) Alan Dron alandron@adepteditorial.com, April 25, 2017.

Alitalia (ALI) has been plunged into crisis after staff refused to back a rescue plan proposed by shareholders and banks. The 11,400-strong workforce had to agree to a new package of cuts, including some -980 redundancies and a -8% pay cut for flight deck (FC) and cabin crew (CA) members, for a €2 billion/$2.2 billion recapitalization package to go ahead. However, staff in the perennially loss-making (ALI) voted 67% against the proposal.

(ALI) now faces the possibility of being placed in “extraordinary administration” (a similar procedure to the US Chapter 11 bankruptcy process whereby a company is granted protection from creditors to give it time to reorganize financially). This would involve the Ministry for Economic Development appointing an Administrator to thrash out a restructuring plan within 180 days. Alternatively, the 70-year-old company could face liquidation, if the Administrator’s plans are rejected by the government.

Shareholders, notably Abu Dhabi-based Etihad Airways (EHD), which took a 49% stake in Alitalia (ALI) in 2014, expressed dismay at events. Shareholders will meet April 27 to discuss available options.

Italian media reports suggested (ALI)’s workers were banking on the Italian government finding some way to bail out the flag carrier again.

(ALI) said its board “took note with regret of the decision of the workforce to not approve the pre-agreement signed on April 14 between (ALI) and the unions. The approval of the agreement would have unlocked €2 billion of recapitalization, including >€900 million of new finance. Given the impossibility to proceed with the recapitalization, the board has decided to start preparing the procedures provided by the law and has convened a shareholders’ meeting on April 27 to deliberate on their implementation.”

In a strongly worded statement, Etihad Aviation Group’s President & (CEO) James Hogan said the workers’ decision put (ALI) at risk. “We deeply regret the (ALI) staff vote outcome, which means that all parties will lose: (ALI)’s employees, its customers and its shareholders, and ultimately also Italy, for which (ALI) is an ambassador all over the world,” Hogan said. “(ALI)’s shareholders, including (EHD), have provided vast amounts of financial and commercial support during the past 3 years. Jointly with the Italian shareholders, (EHD) had reaffirmed its strong commitment and principal willingness to support (ALI) with a package worth nearly €2 billion in aggregate to help fund (ALI)’s new 5-year business plan.”

Hogan continued, “A key condition to this commitment was that an agreed and concerted effort would be made by all interested parties, including the unions. The preliminary agreement with unions that was made possible and supported by the union leaders, (ALI) management, the Italian Prime Minister and 3 government Ministers would have helped secure (ALI)’s future. The rejection of this agreement in the staff ballot is deeply disappointing.”

News Item A-3: Italy is preparing an emergency bridge loan to keep Alitalia (ALI) going, in hopes of finding a buyer, after employees derailed (ALI)’s turnaround plan by rejecting a labor agreement.

The Italian government has ruled out re-nationalizing the struggling airline, Economic Development Minister Carlo Calenda said. That leaves only 1 option: providing (ALI) with a loan of €300 to €400 million/$316 to $421 million) to keep it operating for 6 months.

May 2017: News Item A-1: Italy’s national carrier Alitalia (ALI) and Argentina’s flag carrier Aerolíneas Argentinas (ARG) are expanding their existing commercial agreement with a code share arrangement.

Effective immediately, the new cooperation will see (ALI) placing its AZ code on (ARG)’s daily Rome to Buenos Aires service and on to >40 destinations in South America that (ARG) serves.

In return, (ARG) will put its AR code on Alitalia (ALI)’s 7x-weekly frequencies between the 2 nations’ capitals. This will allow (ARG) passengers to transfer on to >30 destinations in Europe and the Middle East on the Alitalia (ALI) route map.

From September, (ALI) will be operating its new flagship Boeing 777-300ER on 3 of the weekly services.

Buenos Aires has strong connections to Italy, with a substantial proportion of its inhabitants having Italian ancestry.

The code share is the latest in a series of moves by (ALI), the Italian flag carrier to expand its penetration of the South American market. In 2016, it added new flights to Santiago, Mexico City and Havana.

News Item A-2: Alitalia (ALI) shareholders declared the recapitalisation impossible and filed for administration on May 2. Administrators Luigi Gubitosi, Enrico Laghi and Stefano Paleari have been recruited to run (ALI).

(ALI) in its current form arose from a previous administration in 2008, but it has continued to find profitability elusive (even after the arrival of Etihad (EHD) as a key investor).

The government is providing a bridging loan to enable (ALI) to continue operations while a new strategic partner is sought. It is now seeking expressions of interest in (ALI) by mid-June. It aims to conclude the sale process by October.

June 2017: News Item A-1: Alitalia (ALI) has attracted 32 expressions of interest, including Ryanair (RYR), which could include a connecting flight partnership.

Etihad Airways (EHD) equity partner (ALI) went into special administration in May, after employees voted against a labor agreement that was critical to (RYR)’s turnaround plan.

The Italian government agreed to a €600 million/$666 million bridge loan to keep (ALI) flying for 6 months and special commissioners called for parties to express their interest by June 5. “(ALI) sources confirm 32 expressions of interest had been received. Now (ALI) commissioners are assessing the many offers in order to decide which of them to admit to (ALI)'s data room. The data room will be opened mid-June, between June 15 and June 20. As to the companies, the procedure has to meet certain requirements therefore the names have to remain confidential at this stage.”

While the candidates are not being disclosed, (RYR) has confirmed it is among them. “We have submitted an expression of interest. As previously stated, we are not interested in buying (ALI). However, we have offered to feed Alitalia’s long-haul traffic, given we are the largest airline in Italy with the largest route network. We are preparing to deploy up to 20 aircraft initially over a 2-week period this summer if (ALI) cuts capacity significantly. We’ve written to the Italian government and said if something untoward happens, don’t worry, we will step into the breach,” an (RYR) spokesman said.

Ryanair (RYR) recently began offering connections between its own flights at Rome Fiumicino, but the spokesman said this was a long-planned initiative that had no connection with its interest in Alitalia (ALI).

(ALI)’s flights continue to operate normally and on June 6, (ALI) announced plans to return to India (after a 9-year absence) with a daily Airbus A330 Rome Fiumicino to New Delhi service, which will launch October 30 and run through the winter until March 24, 2018.

Male in the Maldives will also join (ALI)’s network as of October 31 and (ALI)’s Los Angeles flights will continue for the winter season.

News Item A-2: "EasyJet Confirms Interest in Alitalia" by
Victoria Moores victoria.moores@penton.com, June 15, 2017.

easyJet (EZY) has confirmed it is among the parties that have expressed an interest in troubled Italian flag carrier Alitalia (ALI), which is separately facing strike disruption June 17.

Abu Dhabi-based Etihad Airways (EHD)'s equity partner Alitalia (ALI) went into "special administration" in May after employees voted against a labor agreement, which was critical to (ALI)’s turnaround plan. Special commissioners called for parties to declare their interest by June 5, which attracted 32 expressions of interest, including Irish (LCC) Ryanair (RYR) that is interested in a connecting flight partnership.

“We can confirm we are interested,” (CEO) Carolyn McCall said in Toulouse on June 14. She added: “We are not allowed to comment on the process, whatsoever. We have been asked by the government not to make any comments on (ALI).”

In general, McCall described Italy as a core market for easyJet (EZY) and said she sees further opportunities there. When asked whether (ALI)’s troubles had benefited (EZY), she said: “Everyone in Italy has benefited from the uncertainty surrounding Alitalia (ALI), but I don’t think it is a significant material benefit.”

(ALI) previously said it would open up its data to qualifying potential partners June 15 to 20, but the identity of interested parties was confidential.

Separately, (ALI)’s operations will be disrupted by a general transport sector strike scheduled for June 16. “The company was forced to cancel several domestic and international flights scheduled for June 16, as well as some flights in the early morning of June 17. Flights departing from Italy will operate as usual between 07:00 and 10:00 and between 18:00 to 21:00 Rome time on June 16,” (ALI) said.

(ALI) added that extra staff will be available at Rome Fiumicino and Milan Linate airports to handle the disruption, and larger aircraft will be deployed on several domestic and international routes to carry as many passengers as possible.

News Item A-3: "Walsh: (IAG)’s Level and Vueling on Standby to Fill Alitalia Capacity" by (ATW) Kurt Hofmann hofmann.aviation@netway.at, June 30, 2017.

International Airlines Group (IAG) (CEO) Willie Walsh said (IAG) member airlines Level (LVL) and Vueling (VUZ) are prepared to provide immediate additional capacity if Alitalia (ALI) is forced to downsize and restructure further.

Speaking on the sidelines of an Airlines for Europe (A4E) event at the European Parliament in Brussels June 29, Walsh said Spanish low-cost carrier (LCC) Vueling (VUZ), an (IAG) member airline, “has a significant operation in Italy and we will [also] operate our new long-haul (LCC) Level (LVL) from Rome Fiumicino.”

The (IAG)’s new Level airline (LVL) launched flights from Barcelona June 1. “The passenger demand is absolutely fantastic,” Walsh said. “Level (LVL) operates 2 Airbus A330s [and] 3 more aircraft are expected to join the fleet in 2018.”

Walsh said the (IAG) is not interested in acquiring Alitalia (ALI).
“We had been very clear: any reduction of capacity [from (ALI)] as a result of [its] restructuring will be filled,” Walsh said, adding it would not possible for the (IAG) to take over aircraft from (ALI), saying nearly all of (ALI)’s aircraft are leased and mostly Irish-registered.

Responding to a question about (IAG) member airline British Airways (BAB)’s plans to wet-lease 9 Qatar Airways (QTA) Airbus A320 family aircraft to fly its passengers during a planned 16-day mixed fleet cabin crew strike set for July 1 to 16, Walsh said “British Airways (BAB) will continue flying. Where [there] are disruptions [by the strike], we [will] use capacity from other airlines like we did in the past. We did it before and we [will] do it again. There is nothing new in this,” Walsh said. “We demonstrated [this] successfully on other occasions. When we say we operate, we operate.”

July 2017: Alitalia (ALI) relaunched 2x-weekly Rome to Split (Croatia) Airbus A319 service and will restart 2x-weekly Rome to Dubrovnik Airbus A320 services July 23 through September 10.

August 2017: News Item A-1: "Is Europe in the Next Phase of Consolidation?" by (ATW) Victoria Moores victoria.moores@penton.com in "Need I say Moores," August 15, 2017.

Do the airberlin (BER) and Alitalia (ALI) insolvency filings signal the next wave of European industry consolidation?

On August 15, (BER) filed for insolvency and the German government stepped in with a bridging loan. Just 3 months earlier, the same scenario played out with Alitalia (ALI) and the Italian government. In both cases, shareholder Etihad Airways (EHD) decided it could no longer keep pumping funds into these strategic partners.

Airberlin (BER) said negotiations (with German rival the Lufthansa Group and other partners) to sell some of its business units are “far advanced and highly promising” and may be finalized shortly.

Lufthansa (DLH) has already capitalized on its German competitor’s weakness by taking wet-leased aircraft from airberlin (BER), depleting its competitor and supporting growth at its own airlines (a double win).

The question is whether this is the beginning of another European shake-out, mirroring industry consolidation in the USA market that ultimately has been the foundation for its profitability, or another repeat of the cycle in which ‘middle seat’ European airlines (that are neither niche players, nor consolidation drivers) are simply not allowed to die.

One consolidation positive is that customers have got used to geography-neutral named airlines like Ryanair (RYR) and easyJet (EZY), backing cheap travel over nationalism. This could pave the way for some brands to disappear, although national pride and the sense of having a “flag carrier” in countries like France and Italy is still extremely strong.

Meanwhile, Europe’s "big 3": Air France (AFA) - (KLM), the International Airlines Group (IAG) and the Lufthansa Group would still like to get bigger, as evidenced by Lufthansa (DLH)’s interest in acquiring parts of airberlin (BER) and (AFA) - (KLM)’s recent multi-faceted joint venture plan with Virgin Atlantic (VAA), (DAL) and China Eastern (CEA). As with Cyprus Airways (CYP), the market is poised to absorb airlines and quickly fill in the gaps without faltering.

Only time will tell if some of Europe's brands will be allowed to disappear, as a result of true consolidation, or if this is another false cycle, where little will change.

News Item A-2: Greybull Capital, the owner of Monarch Airlines (MON), is the latest company to emerge as interested in Alitalia (ALI), highlighting the possibility that the Italian flag carrier’s operations could be sold off separately (even though Italy’s government has stated a preference for a sale of the company as a whole). Investment company Greybull, which is most famous for its rescue of British Steel (and which took a majority stake in Monarch Airlines (MON) in 2014).

November 2017: The Lufthansa Group would develop Rome Fiumicino into its 5th major European hub should it be successful in its bid to acquire parts of Alitalia (ALI). The group currently operates hubs at Frankfurt International and Munich (for Lufthansa (DLH)), Zurich (for Swiss (CSR)), and Vienna (for Austrian Airlines (AUL)).

Speaking during the presentation of the Group's (3Q) 2017 financial results, (DLH)'s (CEO) Carsten Spohr also told journalists that low-cost carrier (LCC) Eurowings (EWG) may also assume (ALI)'s Milan Linate and Milan Malpensa operations in such a scenario.

The Financial Times has meanwhile reported that Cerberus Capital Management has also approached Alitalia (ALI) with a proposal to keep it operational but as an independent stand-alone carrier.

According to the report, Cerberus would be willing to invest between EUR100 and 400 million/USD116 to 464million) in (ALI) as part of a plan in which the Italian government would retain a stake in the airline alongside unions. Both would also participate in a profit-sharing scheme. The USA private equity fund has previous experience in restructuring large scale operators having tended to Air Canada (ACN) in the 2000s.

Despite this proposal, Cerberus has not entered a binding offer for (ALI)'s assets. Thus far, only Lufthansa (DLH) and easyJet (EZY) have openly confirmed submitting offers.

January 2018: Lufthansa (DLH) wants Alitalia (ALI) to undertake significant restructuring before the German group would be prepared to buy the struggling airline, its (CEO) has told the Italian government. Reuters reported that Carsten Spohr (CEO) sent a letter to Italian Economic Development Minister Carlo Calenda in which he said both the work force and fleet of a restructured “New Alitalia” should be smaller.

February 2018: A deal to rescue Alitalia (ALI) is unlikely to be reached before Italian elections in early March, according to a senior government official. Economic Development Minister Carlo Calenda said in an interview with Italian newspaper "La Stampa" that potential investors are waiting to see the results of the March 4 elections. UK-based easyJet (EZY) has said it is interested in taking over parts of Alitalia (ALI), while Germany’s Lufthansa Group has called for major cuts.

April 2018: News Item A-1: UK (LCC) easyJet (EZY) has revised its expression of interest in Italian flag carrier Alitalia (ALI), acting together with unnamed consortium partners.

(EZY) has remained tight-lipped on the (ALI) bidding process, but as a stock-exchange listed company it is obliged to disclose any significant updates.

On April 10, (EZY) told the market: “EasyJet (EZY) has today submitted a revised expression of interest for a restructured Alitalia (ALI), together as part of a consortium, consistent with (EZY)’s existing strategy for Italy. Given the nature of the process, the content of the expression of interest is subject to confidentiality.”

In keeping with normal market rules, (EZY) cautioned that (at this stage) there is no certainty of the transaction proceeding.

“(EZY) will provide a further update in due course if and when appropriate,” (EZY) said.

Air France (AFA) - (KLM) has been repeatedly linked to a joint bid with (EZY) for (ALI), but has denied the reports.

Previously, Lufthansa (DLH) has also confirmed an expression of interest in acquiring parts of (ALI). USA investment fund Cerberus Capital Management was also in the mix of potential investors.

(ALI) entered the Italian equivalent of Chapter 11 bankruptcy proceedings in May 2017. The deadline for binding offers was October 16, but the timelines for the process have since been delayed.

News Item A-2: Alitalia (ALI) began 4x-weekly Rome to Johannesburg, South Africa Airbus A330 service.

News Item A-3: https://www.airvuz.com/video/Bella-Milano-A-short-film-about-the-city-of-Milan--new-evolving-skyline-Cinematic-4k-drone-footage?id=

November 2018: After Primera Air (JTX)’s bankruptcy last month, 5 new Airbus 321neos are looking for an owner.

Alitalia (ALI) will add 3 of them to its fleet. The aircraft will join the fleet in January 2019 in order to replace 3 old Airbus A321-100s.

2 planes are owned by leasing company (GECAS) (OE-IHS) ex-(OY-PAF), (OE-IHV) ex (OY-PAA) and 3 by Celestial (OY-PAC), (OY-PAD), (OY-PAE).

Danish budget carrier Primera Air (JTX) filed for bankruptcy last month and ceased all operations. The airline was using the A321neos to fly from Europe to North America.

The A321neos consume considerably less fuel than older A321 variants. New planes are also cheaper in terms of maintenance and offer better passenger comfort. Besides, the aircraft has a more extended flight range.

The A321neo has 182Y economy seats and 16C business of comfort economy seats. Alitalia (ALI) will likely keep this configuration since their A321-100s are in a similar configuration.

Alitalia (ALI) has been bankrupt for a year and a half but has been kept up and running by the Italian state since then. Although the revenues of the company are increasing under the supervision of “Extraordinary Administration” appointed by the Italian government, (ALI) continues to operate at a loss of about €1.5 million per day.

The Italian government is looking for foreign investors to take up to 40% share of (ALI).

December 2018: "Italian Flag Carrier, Alitalia (ALI), is Ready to Take Delivery of its 3 Airbus A321neos While it Continues to Operate under "Exclusive Administration" by Jonathan Winton, Airways" December 7, 2018.

As (ALI) continues to operate in the face of mounting uncertainty over its future beyond 2019, (ALI) is now embarking on a small scale fleet modernization, which will see a limited number of 2nd-hand new generation Airbus A321neo join its fleet in the coming months.

Having entered bankruptcy protection in May 2017, (ALI) went on to receive over €1 billion in emergency funding from the Italian government, which had to be paid by the beginning of December.

The original deadline for repayment of the loan has since been extended until June 2019, as (ALI) and the government scramble to find a prospective buyer.

These incoming new generation Airbus A321neos, previously operated by now-defunct Primera Air, will enable Alitalia to reap the immediate financial benefits of lower fuel burn on many of its popular routes.

The 3 aircraft, owned by leasing companies (GECAS) and Celestial, will inject a breath of fresh air to the ill-fated airline, which just recorded yet another record-breaking month as Europe’s most on-time airline.

(ALI) continues to operate many of the earliest-built examples of the Airbus A321, which were produced in the mid-1990s. Having taken delivery of their 1st example back in November 1994, many of these aging Airbus’ continue to fly with (ALI).

The 1st A321neo (ALI) will take delivery of will be (OY-PAC), previously delivered to Primera Air Scandinavia in May 2018. With Primera Air having ceased operations, at the end of September, this A321neo, along with another pair, remain in temporary storage at Newquay Airport.

Soon, the plane is to be repainted into (ALI)’s colors and delivered to Rome, entering service by January 2019.


Click below for photos:
ALI-777 - 2012-08
ALI-777-200 - 2017-02.jpg
ALI-777-200 2018-04.jpg
ALI-A319 A320 A330-200 - 2014-04
ALI-A320 - 2017-01.jpg
ALI-A321-100 - 2014-08
ALI-A330-200 - 2013-04
ALI-A330-200 - EXPO MILANO 2015 - 2013-10

December 2018:

1 737-4YO (CFM56-3) (1616-23868, TC-ANI), (ALI) EXPRESS OPERATIONS 2000-10.


0 747-230B (CF6-50E2) (345-21589, /78 I-DEMY), EX-(DLH), 1 WFU. 36C, 368Y.

0 747-243B (CF6-50E2) (533-22510, /81 I-DEMG; 536-22511, /81 I-DEML; 542-22512, /81 I-DEMN; 546-22513, /81 I-DEMP; 575-22969, /82 I-DEMS; 22618. 22969 TO (TBC) 2002-11. 5 WFU. 36C, 368Y.

0 747-243F (CF6-50E2) (545-22545, /81 I-DEMR; 618-23301, /85 I-DEMV; 619-22508, /80 I-DEMF), 22508 ST (TLS), 22506; 22545 ST ADVENTAR 2004-04, LEASED TO (VDA)/(ABC), IN 2008-04 TO (CGB). FREIGHTER.

0 747-243SF (CF6-50E) (492-22506, /80 I-DEMC), SOLD TO ADVENTAR, LEASED TO (ABC), IN 2007-10 TO (CGB). FREIGHTER.

0 747-47UF (CF6-80C2) (1242-30558, N409MC), (TLS) WET-LEASED.

0 747-400, (KLM) WET-LEASED 1998-11, RETURNED.

0 767-35HER (459-26389, EI-DBP), EX-(ACN), (TCI) LEASED 2003-06, RETURNED.

0 767-3Q8ER (CF6-80C2B6F) (747-29383, /99 EI-CRO), (ILF) LEASED, (EUY) OPERATIONS, RETURNED. 35C, 176Y.

0 767-3S1ER (559-26608, EI-DDW), (GEF) LEASED. WITHDRAWN FROM SERVICE 2012-10.

0 767-31BER (CF6-80C2F) (534-26259, /94 EI-CRD; 542-25170, /94 EI-CRF), EX-(GUN), (ILF) LEASED, WET-LEASED TO (EUY). 25170; TO CONDOR (CDF) 2012-07. RETURNED.

0 767-33AER (CF6-80C2B6F) (560-27376, /94 I-DEIB, LEASED TO (TAU); 561-27377, /94 I-DEIC, LEASED TO (MON) 1995-07; 578-27908, /95 I-DEIF, EX-(SIL); 584-27468, /95 I-DEID; 603-27918, /96 I-DEIG; 611-28147, /96 I-DEIL, EX-(SIL), (AWW) LEASED, 27908; 28147; SOLD TO OMNI AIR (OAE) 2009-08. RETURNED. ALL 767'S (ETOPS), 25C, 198Y.

0 767-341ER (774-30342, /99 EI-CTW), RETURNED (GEF), 5 YEAR LEASED TO (EUY) 2000-01, EX-(EUY), LEASED 2002-06. RETURNED 2004-09.

0 767-343ER (CF6-80C2B6F) (743-20008, /99 EI-CRL; 746-20009, /99 EI-CRM), (GEF) LEASED, WET-LEASED TO (TAU). RETURNED. 35C, 176Y.

9 +23/1 ORDERS 777-243ER (GE90-94B) (413-32855, /02 I-DISA "TAORMINA;" 421-32856, /02 I-DISE "PORTOFINO;" 424-32857, /02 I-DISO "POSITANO;" 425-32858, /02 I-DISU "MADONNA DI CAMPIGLIO;" 426-32859, /03 EI-ISB "PORTO ROTONDO;" 439-32860, /03 I-DISD "CORTINA D'AMPEZZO;" 455-32883, /03 I-DISK "OSTUNI;" 477-32784, I-DIDH "TROPEA" 2004-05), OPTIONS MAY BE 777-300ER'S. 42C, 249Y.

2 +1 ORDER 777-200ER (GE90-94B) (32782, EI-DBM), (GEF) LEASED 2003-10.

1 777-300ER.

0 MD-82 (JT8D-217A/C) (1737-49970, /90 I-DAVZ "MCDONALDS") (49194; 49195; 49204; 49205; 49206), 3 LEASED TO (EUY), 49212; 49214; 49215; 49218; SOLD TO (EUY) 2004-06. 49430; 49432; SOLD TO DUBROVNIK AIRLINES 2005-01. 49210; 49220; 49431; WFU IN STORAGE 2005-02. 52531 TRADED-IN TO (TBC) 2005-06. 23 RETURNED TO (CLG) LEASED TO (SFA) 2008-12. 6 TO BE RETIRED IN 2012 AND REST BY 2013-12. 164Y.

0 MD-11F COMBI (CF6-80C2D1F) (468-48426, /92 I-DUPA "GIOACCHINO ROSSINI;" 471-48427, EI-UPE; 474-48428, EI-UPI; 500-48429, EI-UPO), 48431 SOLD TO WELLS FARGO 2004-06. ALITALIA CARGO OPERATIONS. (PSS) LEASED. 3 TO CARGOITALIA (CGT) 2009-06. 48426; TO (AWW) & LEASED TO (TWX) 2009-09. 30C, 174Y/PLTS.


0 MD-11 (CF6-80C2D1F) (534-48431, /93 I-DUPB "PIETRO MASCAGNI"), 48431; 48581; & 48630; SOLD TO (LUB) 2004-05. 30C, 253Y.

0 A300B4, SOLD 8 TO AIRBUS (1997-05), 173 TO (ICC), (CSV) LEASED.

22 A319-112 (CFM56-5B6/P) (1722, /02 I-BIMA "ISOLA D'ELBA;" 1737; 1740, /02 I-BIME "ISOLA DI PANAREA;" 1745 /02 I-BIMI "ISOLA DI PONZA;" 1756; 1770, /02 I-BIMO "ISOLA D'ISCHIA;" 1779 /02 I-BIMJ "ISOLA DI CAPRERA;" 2033 /03 I-BIMB; 2057, /03 I-BIMB; 2083, I-BIMF; 2086, I-BIMG; 2101; 2102, I-BIMH, 2004-02; 2127; 4579, EI-IMM; 4764, EI-IMN; 5018, EI-IMT "SILVIO PELLICO;" 5294, EI-IMV; 5383, EI-IMW; 5424, EI-IMX)), 126CY.

18 A320-214 (CFM56-5B4/2) (951, /99 I-BIKA "JOHANN SEBASTIAN BACH;" 999, /99 I-BIKE "FRANZ LISZT;" 1138, /99 I-BIKI "GIROLAMO FRESCOBALDI;" 1168, /00 I-BIKO "GEORGE BIZET;" 1226, /00 I-BIKB "WOLFGANG AMADEUS MOZART;" 1448, /01 I-BIKC "ZEFIRO;" 1457, /01 I-BIKD "MAESTRALE;" 1473, /01 I-BIKF "GRECALE;" 1480, /01 I-BIKG "SCIROCCO;" 1489, /01 I-BIKL "LIBECCIO;" 1217, /00 I-BIKU "FRYDERYK CHOPIN;" 3161, I-WEBB "IPPOLITO NIEVO"). 5 LEASED TO (EUY) 2001-06. 1480 RETURNED 2002-10. 1457 RETURNED FROM (EUY). 159CY.

20 A320-216 (CFM56-5B6/P) (3213, EI-DSI "CARLO EMILLO GADDA; 3295, EI-DSJ "IGNAZIO SILONE;" 3362, EI-DSM - - SEE PHOTO - - "ALI-A320-216-2014-03;" 3464, EI-DSO "LUIGI CCAPUANA;" 3482, EI-DSP "IPPOLITO NIEVO;" 3643, EI-DSX "TRILUSSA;" 3695, EI-DSZ; 3732, EI-DTA; 3815, /09 EI-DTB; 3831, /09 EI-DTC; 3846, /09 EI-DTD; 3885, /09 EI-DTW; 3906, /09 EI-DTF "GIOVANNI BOCCACCIO;" 3921, /09 EI-DTG "LUDOVICO ARIOSTO;" 3956, /09 EI-DTH "TORQUATO TASSO;" 3976, /09 EI-DTI; 3978, /09 EI-DTJ "GIOVANNI PASCOLI;" 4075, /10 EI-DTK; 4108, /10 EI-DTL; 4119, /10 EI-DTM; 4143, /10 EI-DTN; 4152, /10 EI-DTO; 4195, /10 EI-EIA "ELSA MORANTE;" 4249, /10 EI-EIB "UMBERTO SEBA;" 4419, /10 EI-DTM; 4520, /10 EI-EIC; 4523, /10 EI-EID; 4536, /10 EI-EIE), AIRCRAFT PURCHASE FLEET LEASED. 159CY.



2 A330-202 (CF6-80E1A4) (825, I-EJGA; 831, I-EJGB), ETIHAD AIRWAYS (EHD) LEASED 2015-06. 28C, 21 PY, 175Y.

13 A330-202 (CF6-80E1A4) (1123, /10 EI-EJG "RAFFAELLIO SANZIO;" 1135, /10 EI-EJH "SANDRO BOTTICELLI;" 1218, /11 EI-EJI CANALETTO;" 1225, /11 EI-EJJ "MICHELANGELO MERISI DA CARAVAGGIO;" 1252, /11 EI-EI-EJK "GIOTTO;" 1283, /12 EI-EJL; 1308, /12 EI-EJM; 1313, /12 EI-EJN; 1327, EI-EJO, 2012-07). LEASED. 28C, 21 PY; 175Y.

1 A340-500

12 ORDERS (2015-02) A350-800XWB (TRENT XWB-74:

0 F 70 (TAY 620-15), 4 RETIRED.

9 ATR42-300 (ALI EXPRESS).

4 ATR72-210 (ALI EXPRESS).


6 +1/9 ORDER EMBRAER EMB-145 (AE3007) (250, /00 I-EXMA) ("ENRICO FERMI" 2000-09) (299, /00 I-EXMO "LUIGI PIRANDELLO") (282, /00 I-EXME) (316, /00 I-EXMU) (330, /00 I-EXMB). ALITALIA EXPRESS OPERATIONS. 48Y.





Click below for photos:
ALI-1-Cramer Ball - 2015-12.jpg
ALI-1-Luca Cordero di Montezemolo-C.jpg
ALI-2-James Hogan-R-Etihad Partners.jpg


James has indicated will step down later this year (2017).

Cramer was a former (CEO) of India’s Jet Airways (JPL) and Air Seychelles (2 airlines where he led substantial transformation programs).

“I believe Cramer is the right person to continue leading the development and implementation of our industrial plan, which is now well in motion, with a target to make the company profitable in 2017,” (ALI) Chairman, Luca Cordero di Montezemolo had said.

Former (ALI) deputy General Manager Business, Giancarlo became (COO), overseeing Operational Performance, Safety & Security, Flight Operations, Engineering & Maintenance, Ground Operations, and Quality. Schisano has been with (ALI) since 2005, and his roles have included Executive VP cargo.

James has indicated he will step down later this year (2017).

Ariodante was previously General Manager at Italian ferry company Grandi Navi Veloci (GNV), and was described by (ALI) as an experienced Sales & Marketing leader who had helped chart (GNV)’s strategic long-term growth.

He has been in the transportation and consumer industry for >30 years. Apart from his recent post at (GNV), he has held top-level positions with automaker Fiat, car-hire company, Hertz Italia and fashion brand, the Benetton Group.

Ariodante started this role with Alitalia (ALI) on October 1, 2014 and leads (ALI)’s Sales & Marketing operations. He faced a situation in which (ALI) the Italian flag carrier faced fierce competition by low-cost carriers (LCC)s and domestic high-speed railway services. However, the link with Etihad (EHD) should provide increasing opportunities to sell long-haul services to consumers in a greatly increased long-haul route network, it now has access to via (EHD)'s Abu Dhabi hub and across the networks of its other equity partners.

Ariodante added: “I look forward to working with the many professionals at Alitalia (ALI). It is an exciting time in the company’s history as we develop (ALI) into a world-class global carrier.”

As the former (ALI) Executive VP Human Resources (HR), Antonio moved into a similar role as Chief People & Performance Officer. He manages (ALI)’s (HR) function, including People Development, Compensation, Benefits, Labor Cost Planning & Controlling.


An (EHD) veteran, with previous senior executive roles with Jetstar Airways (IMU) and Gulf Air (GUL), John took responsibility for Pricing, Capacity & Revenue Management, Route & Network Planning, Alliances & Fleet.












CLEMENTE SENNI, VP COMMUNICATIONS (senni.clemente@alitalia.it).
































ATITECH (MRO): (info@atitech.it).




(sant.elia.ernesto@alitalia.it) (2001-03).





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