Want to Buy Alitalia? Hurry: The Pilots Are Running Away

There's a big international airline up for sale, and you might be able to take it home for just a billion dollars. But you have to hurry: the deadline to present a binding offer is October 2. That airline is Alitalia, Europe's 13th biggest by passengers carried, and a fallen, bankrupt giant that still manages to field a respectable fleet of more than 100 jets and a route network spanning five continents.

Italy's Alitalia has been in bankruptcy since May, for the second time since 2008. It loses tons of money — already about $100 million a month this year, according to figures made public before the bankruptcy — and has a notoriously strike-prone workforce, as well as $3.3 billion in debt. But it also offers a host of attractive routes to North and South America, and a couple dozen relatively recent Airbuses and Boeings to fly them.

Any buyer would, however, face a problem more immediate and worrisome than frequent strikes or heavy debt. Alitalia is hemorrhaging pilots, possibly at a rate that could imperil the SkyTeam carrier's ability to operate all of its scheduled flights. And, according to current and former Alitalia pilots who spoke with TPG on condition of anonymity because they are not authorized to talk to media, other airlines are raiding the company to hire trained captains and first officers away.

"There is an exodus" of pilots, said one of them, a first officer who's been with the airline since the 1990s. "The numbers are such that assigning shifts has become a problem. I have personally seen flights operated by two captains because an available first officer could not be found," he said.

"I don't have exact figures" for how many have left, but cockpit crew members are worried about the pace of resignations, the pilot said. "We have recruiting agencies come every week and sweep up pilots even inside our training center. I've seen it myself," he added.

The airline says it's nothing to worry about. "There have certainly been pilots who left since the beginning of the year, but that's something to be expected given the current situation," a spokesperson told TPG from Alitalia's Rome headquarters. (As a SkyTeam partner, Alitalia is also an option when redeeming Delta SkyMiles for award travel — but no one knows yet what would happen to that if the airline were to be sold.)

Alitalia pilots are required by contract to give a 120-day notice when resigning, which may lead to a surge of exits towards the end of September, or four months since the bankruptcy, said an Airbus A330 captain who has been flying with the airline for almost two decades. Chinese airlines hungry for pilots to keep up with growth are among those vying to snatch top flying talent from Alitalia, he said, and some of them are even willing to hire current first officers directly as captains. Other airlines hiring Alitalia crew include European low-cost operator Wizz Air, he said, "through recruiting agencies that contact you directly."

Underscoring how airline hiring has become truly globalized, Italian pilots are heading to fast-growing airlines in Africa, too. "Some of them have taken part in selections here," said a former Alitalia captain who now flies for one of Africa's largest airlines.

"Flight crew aren't waiting to see how it ends before looking for a way out. They're sending applications and resumes before a possible dissolution of the company," said Gregory Alegi, a professor at Rome's LUISS Guido Carli University who teaches courses on the history of aviation.

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As often happens in European aviation, the vocal CEO of Ryanair, Michael O'Leary, has stepped into the fray. The man who leads the continent's biggest airline may be ready to buy the whole of Alitalia, according to Bloomberg, saving it from being sold off in pieces. O'Leary is known for blustering, but the Italian market is attractive — a nation of 60 million with the world's eighth-largest economy, where Ryanair is already no. 1 by passengers carried — and he would probably get a very good bargain.

Alitalia is not listed on a stock exchange, and it's therefore impossible to make an estimate of its value based on its share price. We do know however that Etihad Airways paid around $600 million for 49% of the airline in 2014, and now that Alitalia is bankrupt and Etihad has soured on the deal, a savvy buyer could drive the price for the entire business down to a billion or lower.

Observers aren't so sure that O'Leary would actually want Alitalia's short haul operations, though. The real prize is the intercontinental network, along with the 26 Airbus A330s and Boeing 777s serving it.

"The short haul market to/from and within Italy is already ceded to low-cost carriers, so long haul is the real area of interest," said John Strickland, a London-based independent aviation consultant. "I'd be surprised if any private investor would take it on as a 100% entity."