Alitalia Starts Bankruptcy Procedures: What Does This Mean for Travelers?
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
After decades of financial trouble, Alitalia’s shareholders unanimously voted today to enter bankruptcy procedures. This comes in the wake of the airline’s crew rejecting a $2.2 billion recapitalization plan that would have kept the carrier afloat — but would have also meant a pay cut to crewmembers, with 1,600 workers being laid off.
Sound familiar? Well, this isn’t Alitalia’s first time in bankruptcy. In 2008, the carrier entered bankruptcy, but turned around with help from an investment from Air France KLM in 2009. Then in 2014, Etihad jumped in to help Alitalia, taking a potentially bankruptcy-saving 49% ownership in the troubled airline. This latter investment seems to have been an especially poor one, and seems to have factored into the Etihad CEO stepping down later this year.
Is this latest bankruptcy finally going to do Alitalia in? We will have to see. But, unlike with previous bankruptcies and times of financial uncertainty, the airline doesn’t have the full support of the government. The Italian finance minister Pier Carlo Padoan is reinforcing that the airline is a “private company” and saying its future is “in the hands of shareholders and management.” He insists that the government won’t pump cash into the company to keep it afloat, and the country won’t nationalize the airline.
So, when is Alitalia shutting down? Not quite yet. Starting the bankruptcy procedures is a significant legal step, but it’s going to be a bit before it impacts travelers. While the Italian government is making it clear that it’s not going to have a long-term investment into Alitalia, it’s prepared to take steps to “minimize the cost to citizens and travelers” in the short term.
Now that shareholders have voted to enter bankruptcy procedures, Bloomberg explains the next steps for the airline:
A special administrator [will] take formal charge and develop a rescue plan within 180 days, which could be extended for a further 90 days. The plan might entail asset sales, reduced operations and consequently unlimited job cuts aimed at making the airline viable within two years. Alternatively, the person may decide that a turnaround isn’t possible and order the carrier to be liquidated.
After decades of financial trouble, bailouts and a bankruptcy a decade ago, the troubled Italian carrier Alitalia is back in bankruptcy. Operations will continue for the foreseeable future, pending the appointment of a special administrator and the development of that special administrator’s rescue plan.
If you have any Alitalia flights coming up in the next few months, you’re probably not going to be affected. But, it’s wise to have a backup plan anyways. If you have a flight further out, you might want to look into alternatives now, so you aren’t left stranded without a flight closer to your trip.
Featured image courtesy of Gabriel Bouys / Staff via Getty Images
Welcome to The Points Guy!
Earn 50,000 bonus miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new card in the first three months of card membership. Plus, earn up to $100 back in statement credits for eligible purchases at U.S. restaurants in the first three months of card membership.
With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.
- Earn 50,000 Bonus Miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new Card in your first 3 months.
- Plus, earn up to $100 back in statement credits for eligible purchases at U.S. restaurants with your card within the first 3 months of membership.
- Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
- Earn 1X Miles on all other eligible purchases.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights.
- Fee Credit for Global Entry or TSA Pre✓®.
- Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
- No Foreign Transaction Fees.
- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees