Alitalia board gives the green light to 2017-21 business plan

17 / 03 / 2017

  • Alitalia A330-200

The board of directors of Italian flag-carrier Alitalia has approved the airline’s turnaround business plan, which is said to include a range of “radical and necessary measures” required to stabilise and secure Alitalia’s long-term sustainability.

Funding of the 2017-21 business plan by the company’s shareholders remains subject to Alitalia’s trade unions agreeing to a new collective works agreement and headcount-related measures, however.

The airline expects to shortly present the board-approved plan to the Italian Government.

It then expects to meet with relevant trade unions to explain the details of the business plan, discuss related headcount-related measures and to resume talks on a new collective labour agreement.

The intention is to reduce the carrier’s costs by €1bn over the first three years of the plan (ie, by 2019), with reductions in staff and other operating costs.

Alitalia also expects to increase revenues over the same period: specifically by 30%, up from €2.9bn to €3.7bn.

According to a statement from the carrier: “These financial performance indicators are judged to be realistic and achievable by independent advisors and the projected figures would turn Alitalia into a profitable business by 2019.”

Pillars of change

The business plan is said to be supported by four ‘pillars of change’: namely, a recalibrated business model; cost reductions and enhanced productivity; optimisation of the network and partnership; and commercial initiatives based on utilising technology investment to drive revenue.

Cramer Ball, Alitalia’s CEO, commented: “With the approval by the board of directors of the second phase of our business plan we can now accelerate our actions towards turning around Alitalia.

“We re-built our brand in the first phase and invested heavily in staff training and technology so we are now able to move ahead and implement wide-ranging changes.”

He continued: “The aviation industry is ferociously competitive and never stands still. Only through radical change will Alitalia’s fortunes be turned around.

“The radical and necessary measures across the entire airline will secure our long-term sustainability, which will only materialise if the airline is the right size, the right shape and with the right productivity and cost base.

“We must do this, especially in our short and medium-haul business in order to provide a platform to grow our profitable long-haul business further in the future.”

The first of Alitalia’s new flagship aircraft, the Boeing B777-300ER, will join the carrier’s long-haul fleet in August this year, and as part of this latest business plan Alitalia intends to rebalance its fleet by 2018, reducing its narrow-body fleet by 20.

Alitalia also plans to grow its connections from Italy to the Americas, and build its presence at Milan Linate, Sicily and Sardinia. The airline will re-evaluate its transatlantic options to try to fly more often on existing routes and to add new city destinations in the Americas.

The focus seems to be very much on meeting the threat posed by low-cost carriers and other competitors to the airline’s passenger business.