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Italy saves ailing Alitalia yet one more time — by nationalizing it

March 17, 2020
4 min read
Italy saves ailing Alitalia yet one more time — by nationalizing it
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The coronavirus pandemic is pushing the Italian government to do something that hasn't been seen in decades in Europe: Nationalizing an airline.

An emergency decree published on Sunday, introducing billions of euros in measures to help the Italian economy crippled by the pandemic, contains a provision for the state to buy Alitalia. The airline, which hasn't made a profit since 2002 and has been in bankruptcy for almost three years, would be nationalized in response to the crisis. Alitalia is formally for sale, but with the travel industry in tumoil it's highly unlikely that anybody will express an interest in buying it before the deadline to present offers on Wednesday. That might leave the government as the only alternative to shutting down.

Unlike other European airlines, which have essentially grounded themselves, Alitalia is still flying a very limited schedule — mostly to bring back Italians stranded abroad — but is in a dire financial situation. After getting 1.3 billion euros in loans since entering bankruptcy, Alitalia is running out of cash, Reuters reported. Italian media outlets are citing a figure of 2 million euros of losses per day, without specifying where that figure comes from.

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According to the text of the decree, the government might create "a new company , entirely controlled" by the Italian Treasury, "as a consequence of the situation caused by the emergency." This new company might, according to Italian media, take over Alitalia's planes, crews and flight schedules, while debts and other liabilities would be left for taxpayers to take care of.

"It's a bottomless pit for the Italian taxpayer," Andrea Giuricin, a transportation economist at the Milano Bicocca University in Milan, wrote in response to the possible nationalization. "Alitalia has already cost nine billion euros in the past 12 years" in repeated government bailouts, Giuricin calculated.

The European Union generally forbids state aid to companies, considering it an unfair distortion of the market, but does make exceptions. State aid, including outright nationalization, is not allowed "unless it is justified by reasons of general economic development" or part of "general measures open to all enterprises" — a definition which could easily include the emergency cash injections due to the current COVID-19 crisis.

Italy is not alone in considering such drastic measures.

More: Alitalia returns to San Francisco in U.S. expansion push

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Bloomberg reported that the French government is also considering taking a bigger stake in Air France. French Finance minister Bruno Le Maire was quoted as saying that "I could even use the word nationalisation if necessary.”

There were exactly six Alitalia aircraft airborne at 10 a.m. ET on Tuesday. Two were going from Rome to New York, one to Miami, one to Tokyo and one to London, while another was headed to an unidentified destination.

Alitalia is flying a reduced schedule at least until April. The airline says it's offering one-way flights from the U.S. at a reduced rate to facilitate the return of stranded Italians; one-way fares from New York JFK to Rome in March were as low as $389.

Alitalia says on its site that any passengers holding an Alitalia ticket — identified by a ticket number beginning with 055 — whose flight has been canceled can request, by May 31, a no-fee change, a voucher of the same value valid for one year for any Alitalia destination, or a refund.

Featured image by Alberto Riva

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Best for the well-traveled foodie
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

4XEarn 4X Membership Rewards® Points at Restaurants, plus takeout and delivery in the U.S.
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    670-850
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Why We Chose It

There's a lot to love about the Amex Gold card. It's been a fan favorite during the pandemic because of its fantastic rewards rate on restaurants (that includes takeout and delivery in the U.S.!) and U.S. supermarkets. If you're hitting the skies soon, you'll also earn bonus points on travel. Paired with up to $120 in Uber Cash (for U.S. Uber rides or Uber Eats orders) and up to $120 in annual dining statement credits at eligible partners, there's no reason that the foodie shouldn't add this card to their wallet. Enrollment required.

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  • Not as useful for those living outside the U.S.
  • Some may have trouble using Uber/food credits
  • Few travel perks and protections
  • Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months of Card Membership.
  • Earn 4X Membership Rewards® Points at Restaurants, plus takeout and delivery in the U.S., and earn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X).
  • Earn 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com.
  • $120 Uber Cash on Gold: Add your Gold Card to your Uber account and each month automatically get $10 in Uber Cash for Uber Eats orders or Uber rides in the U.S., totaling up to $120 per year.
  • $120 Dining Credit: Satisfy your cravings and earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, Milk Bar and select Shake Shack locations. Enrollment required.
  • Choose the color that suits your style. Gold or Rose Gold.
  • No Foreign Transaction Fees.
  • Annual Fee is $250.
  • Terms Apply.
  • See Rates & Fees