Alitalia Files For US Bankruptcy Protection, Preventing JFK Ejection

Jun 13, 2017

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Alitalia has received temporary bankruptcy protection from a US court just 24 hours before the airline was due to be ejected from Terminal 1 at New York’s JFK airport, according to a court filing by the airline.

Judge Sean Lane of the US Bankruptcy Court in the Southern District of New York issued a temporary restraining order until at least June 23, allowing Alitalia to continue to operate at JFK and in the US despite its financial condition. The beleaguered flag carrier of Italy began bankruptcy procedures in its home country last month after its unions rejected a €2 billion recapitalization plan that would have resulted in pay cuts and layoffs.

According to FlightGlobal, Alitalia said in its Chapter 15 US bankruptcy filing that the operator of JFK’s Terminal 1 had informed the airline that its lease and contract at the airport would be terminated on June 13 due to a failure to pay its bills. The carrier’s US telephone and internet provider had also given notice of its intention to cut off service as of June 20 if its invoices remained unpaid. The restraining order issued by the court prevents both actions from taking place for the time being.

The carrier noted in its filing that its operations at JFK Airport were vital to its finances, stating that 15% of its global revenues are generated from its operations to and from New York and 30% of its overall revenues from its nine flights to and from the US. That’s an impressive amount considering the entire airline serves just under 100 destinations, albeit many of them smaller cities throughout Europe. Alitalia is a member of the SkyTeam alliance, which includes US carrier Delta along with Air France, KLM, Korean Air and others.

Chapter 15 of the US bankruptcy code provides protection for foreign entities operating in the United States — Alitalia currently has 36 employees in the US. The next hearing in the case is scheduled for June 26. In the meantime, if you’re holding tickets on Alitalia, you should be safe in the short term, though it may not be a good choice for longer range planning.

H/T: Live and Let’s Fly

Featured image courtesy of ANDREAS SOLARO/AFP/Getty Images.

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