Alitalia Starts Bankruptcy Procedures: What Does This Mean for Travelers?

May 2, 2017

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.

MILAN, ITALY - OCTOBER 20: President of Etihad James Hogan poses for a photo at the end of the press conference at Malpensa Airport on October 20, 2014 in Milan, Italy. The press conference today announced the first Airbus A330 Alitalia livery during the official Expo 2015.? (Photo by Pier Marco Tacca/Getty Images)
Etihad CEO James Hogan was all smiles in 2015 shortly after Etihad took a large ownership stake in Alitalia. Now he’s stepping down. Photo by Pier Marco Tacca/Getty Images.

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.

Bottom Line

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.

H/T: Bloomberg

Featured image courtesy of Gabriel Bouys / Staff via Getty Images

Chase Sapphire Preferred® Card

WELCOME OFFER: 60,000 Points


CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

Apply Now
More Things to Know
  • Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 when you redeem through Chase Ultimate Rewards®. Plus earn up to $50 in statement credits towards grocery store purchases.
  • 2X points on dining at restaurants including eligible delivery services, takeout and dining out and travel & 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for travel through Chase Ultimate Rewards®. For example, 60,000 points are worth $750 toward travel.
  • With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories.
  • Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for a minimum of one year with DashPass, DoorDash's subscription service. Activate by 12/31/21.
  • Earn 2x total points on up to $1,000 in grocery store purchases per month from November 1, 2020 to April 30, 2021. Includes eligible pick-up and delivery services.
Regular APR
15.99%-22.99% Variable
Annual Fee
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.