Why One of America’s Top Airlines Is Eyeing to Buy One of Europe’s Most-Troubled Airlines

Feb 11, 2019

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Alitalia’s financial troubles have seen the airline file for bankruptcy twice — the first back in 2008 and most recently in 2017.

Despite Etihad securing a partnership through a 49% stake in Alitalia in 2014, the state of the Italian carrier’s finances has remained turbulent. Since then, airlines, including Lufthansa, have gallantly entered bids for the Italian flag carrier, with Delta and EasyJet being the latest to enter the race in 2018.

A recent twist has shown the possibility of an alliance between one of the biggest carriers in the US and one of Europe’s leading low-cost airlines — Delta and EasyJet. The joint takeover would mean the two carriers would share Alitalia’s long-haul and short-haul aircraft, as well as the slots out of the airline’s Italian hub airports in Rome (FCO) and Milan (LIN; MXP). Though Delta can’t own 100% of Alitalia, its partial ownership with EasyJet could bypass restrictions about foreign entities owning 50% or more of a European airline.

In terms of route opportunities, the joint takeover could see Delta increase its market share on routes it already operates to Rome (FCO) and Milan (MXP) — also Alitalia’s long-haul hubs. Perhaps more interestingly, Delta could have the opportunity to takeover Alitalia’s current route network and expand its route network from more US destinations, such as Boston (BOS), Chicago (ORD), Los Angeles (LAX), Miami (MIA) and Washington, DC (IAD). The transatlantic market is arguably one of the most competitive in the industry, and with added pressure from long-haul, low-cost carriers like Norwegian, Delta could see it as time to step in and improve Alitalia’s ‘adequate’ transatlantic crossings.

In the same way, EasyJet could hope to increase its market share in Italy, a country that has been dominated by low-cost rival Ryanair. A joint takeover bid with Delta could see EasyJet becoming a force to be reckoned with in Rome (FCO) by acquiring Alitalia’s European slots. Elsewhere, in Italy’s Northern city of Milan, EasyJet already holds a strong position at Malpensa (MXP) serving dozens of destinations all across Europe. At Linate (LIN), however, the European low-cost airline currently only operates four routes. So an acquisition of Alitalia’s European routes here could see a huge increase in EasyJet’s Italian market share as well as feeding passengers from across Europe into Delta’s Italy-US routes.

Featured photo by GABRIEL BOUYS / Getty Images.

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