Alitalia’s Board Approves Its Unimaginative and Undoubtedly Unsuccessful Restructuring Plan

Credit: crankyflier.com

Since January, Alitalia, the worst airline ever, has been hard at work on restructuring plan #1,403 so it can save itself from doom. This took longer than expected, but the plan has now been approved by the Board of Directors. It does indeed sound a lot like the plan I wrote about in January. Chance of success? Not good.


In short, Alitalia will slash costs and then magically increase revenue by 30 percent. Seems totally likely, right? Just reading through the press release brings up so many obvious problems. Let’s walk through three big ones.


Gigantic Problem #1 – Unions Won’t Like This
In the second paragraph of the release, it becomes very clear what the first major issue will be.


The plan’s funding by the company’s shareholders is subject to Alitalia’s trade unions agreeing to a new collective works agreement and headcount-related measures.


Hahahahahaha. Right, so Alitalia is now going to take the plan to the government. After that, it’ll go to the unions and try to come to an agreement. Alitalia’s unions already agreed to some changes back when Etihad first bought in to the airline. That plan was touted as saving Alitalia, but obviously it didn’t work since now the airline needs another plan. If you think the unions will just gladly step aside, I’ve got a bridge to sell you.


Gigantic Problem #2 – Alitalia Can’t Compete with Low Cost Carriers
The release points out that low cost carriers fly 47 percent of air traffic in the Italian market. To combat this, Alitalia is going to try to turn its short haul operation into a low cost carrier. Look for buy-on-board food, more seats on aircraft, higher aircraft utilization, more ancillaries for sale, and “more attractive airfares.” Oh, and it’s going to cut its Airbus narrowbody fleet from 78 down to 58.


Some of this is obvious and should have been done long ago, but no matter what Alitalia does, there’s no way it’s going to be cost-competitive with a Ryanair or Wizz Air. It can try to drive out cost, but it won’t win. And by cutting the product down to match the low cost carriers, it’s hurting its ability to try to generate a revenue premium (if there’s one to be had at all).


The release says this is “a concerted drive towards increasing revenue while stripping out existing costs,” but really it looks like an attempt to strip out costs without much of a revenue plan at all.


Gigantic Problem #3 – This is a Terrible Time for Long Haul Growth
We’ve been talking here regularly about how the Transatlantic market is brutal right now. Low cost carriers are using new low cost airplanes to flood the market with capacity. The legacies aren’t stepping back, using their own new lower-cost brands as well. So it’s disconcerting, to say the least, that Alitalia’s plan for profit is to grow in this market.


The airline will re-evaluate its transatlantic options to try and fly more often on existing routes and to add new cities in the Americas.


Forget about the fact that for Alitalia to really ramp up its Transatlantic flying, there’s a good chance the joint venture with Delta/KLM/Air France will die. That’s a problem in its own right. There’s also the issue of hugely seasonal demand between Italy and the Americas. Europe to the Americas is always seasonal, but Italy is even more so since it has such a strong reliance on tourism.


All of these factors add up to mean bad news for Alitalia’s prospects.



With 20 fewer short haul airplanes, even increased utilization is going to result in fewer flights than today. For Alitalia to reach its goal of increasing revenue by 30 percent, it must be thinking about a ton of long haul capacity. It’s hard to imagine how this will be profitable long haul capacity, but it could get Alitalia to its goal of increasing revenues. That goal is, of course, useless if it’s not profitable.


The reality is that Alitalia is stuck. Low cost carriers are killing it on short haul flights. And on long haul flights, there’s too much capacity anyway, especially from Europe to the Americas. There’s no viable out for Alitalia, but instead of admitting that, it just keeps rearranging the deck chairs. The good news for Alitalia is that it’ll just keep chugging along. There’s too much national pride in Italy to let this airline die. And that is naturally good news for me and the blog.




Daily Deal

Top Stories

You HAVE to See The Egg Recipe the Internet Can’t Stop Talking About

If cloud eggs haven't made their way into your social feeds, just you wait.
  • 9 hours ago
  • 12

The New York Film Academy opens its latest outpost in Mumbai

As if budding filmmakers needed more reasons to stay in Mumbai, the New York Film Academy (Nyfa.edu), an international film and performing arts school, has announced its new location in the city, in Lower Parel. The school will offer two short-term courses: an eight-week filmmaking workshop and a four-week acting workshop. Students can expect to find […] The post The New York Film Academy opens its latest outpost in Mumbai appeared first on VOGUE India.
  • 1 day ago
  • 10

Video: Changing Behavior of Asian Travelers Is Reshaping Brand Expectations

It won't surprise anyone that Asian travel is a big theme. But this presentation covers a few changes in consumer behaviors that travel brands ignore at their peril. -Sean O'Neill
  • 7 hours ago
  • 9

Highest Paid Travel Tech CEOs and 5 Other Digital Trends This Week

These are the digital trends we were talking about this week. -Sarah Enelow
  • 2 days ago
  • 8

This simple yoga technique can boost focus and make your skin glow

You know it’s called a monkey mind because it keeps jumping from one thought to another. Ancient yogis estimated that we think—on an average—about 60,000 thoughts a day. Today you can multiply that number by at least a 100. It’s no wonder we find it difficult to focus on a task, and that we are […] The post This simple yoga technique can boost focus and make your skin glow appeared first on VOGUE India.
  • 21 hours ago
  • 8

Latest in Travel

22 oversized shirts you need if you love combining style with comfort

Summer is here, and  you’ll be looking for a stealthy new way to show some skin. Enter the oversize button-down shirt, the simple transitional staple you never knew you needed—until now. Even if you’re no stranger to the supersize style (nothing beats a boyfriend’s button-down for bed) and remain unfazed by the no-pants trend (Rihanna, […] The post 22 oversized shirts you need if you love combining style with comfort appeared first on VOGUE India.
  • 12 minutes ago

Bollywood’s fresh-out-of-bed Instagrams are unbelievably flawless

Among all social media platforms, Instagram wins for real-life-like content—Facebook usually requires work (well-thought-through statuses, curated vacation photo albums and carefully-selected profile and cover images) while Snapchat documents even the most random moments of a person’s day. When it comes to Bollywood celebrities, their Instagram profiles are a direct peek into their lives—which movie they’re promoting, […] The post Bollywood’s fresh-out-of-bed Instagrams are unbelievably flawless appeared first on VOGUE India.
  • 12 minutes ago

The most refreshing body scrubs to put in your cart right now

Think body scrubs and the first thing that comes to your mind is probably sugar. From sweet store-bought versions to actually using organic sugar mixed with coconut oil, it’s one of the most popular variants and caters very well to those with extremely dry skin. However, for the rest of us who’d prefer ingredients less […] The post The most refreshing body scrubs to put in your cart right now appeared first on VOGUE India.
  • 12 minutes ago

Where to stay in Sri Lanka in under Rs 7,000

Are you looking to get away from the daily grind for a few days but haven’t saved enough during the year to spend on an exotic summer vacation? We understand satisfying your wanderlust can often feel like a bit of a splurge, but don’t pack away your passports just yet. Click through our slideshow and check […] The post Where to stay in Sri Lanka in under Rs 7,000 appeared first on VOGUE India.
  • 12 minutes ago

All the trends that will be big this holiday season

The term ‘cruise fashion’ was conceived out of necessity. Back in the day, sophisticated travellers would request couture houses to create special collections during holiday season which would be shipped from Paris to New York on cruises. This information was shared by way of short videos before the Dior show took place in Los Angeles. […] The post All the trends that will be big this holiday season appeared first on VOGUE India.
  • 12 minutes ago

Kareena Kapoor Khan and Amrita Arora Ladak’s BFF workout

Everyone knows that the best way to maintain a workout schedule is to exercise with a partner. And if you’ve been avoiding the gym this summer, Kareena Kapoor Khan and Amrita Arora Ladak’s latest Instagrams will bring you right back on track (and into your forgotten track pants). The best friends, who also attend the […] The post Kareena Kapoor Khan and Amrita Arora Ladak’s BFF workout appeared first on VOGUE India.
  • 1 hour ago

The next big thing in the It-girl’s wardrobe? Naked pants

Summer style calls for crop tops, swimsuits and short shorts. As the sun and the sand beckon and we get our sun dresses out, international celebrities are sporting their best beach style—only it’s nowhere close to the beach. Crochet is a summer staple, but this season, its evolved from the cute summer blouse to the […] The post The next big thing in the It-girl’s wardrobe? Naked pants appeared first on VOGUE India.
  • 1 hour ago

How Dior, Balenciaga, and more labels are finding inspiration in the past

Fashion always seems to be looking back to another, oft-considered “better” time. In 2014, the ’70s were everywhere; in 2015, it was the ’90s. We have a sneaking suspicion the ’60s are due for a resurgence—this year marks the 50th anniversary of the Summer of Love, after all. Lately, a few designers have taken a […] The post How Dior, Balenciaga, and more labels are finding inspiration in the past appeared first on VOGUE India.
  • 1 hour ago

10 sunny yellow dresses for days you need cheering up

Citrus yellow has long-been hailed as the definitive shade of summer. And quite right, too. Why, what better hue to radiate seasonal joy than the colour of sunshine itself? However, when it comes to considering this sartorially you may want to veer away from zesty tones and acid brights, which can appear jarring on the […] The post 10 sunny yellow dresses for days you need cheering up appeared first on VOGUE India.
  • 1 hour ago

Irrfan Khan’s summer wardrobe might just be cooler than yours

Irrfan Khan is a maverick. He has forged his own inimitable path through his cinema. As varied as his choices may be, he has always wowed us with his work. But Khan’s individuality extends beyond the powerhouse of talent that he is. His appearances show fashion that is unique, embracing a wild, fun and distinctive […] The post Irrfan Khan’s summer wardrobe might just be cooler than yours appeared first on VOGUE India.
  • 1 hour ago

Gucci rewrites history in Florence’s Pitti Palace

Gucci’s Alessandro Michele is as much a historian as he is a creative director. For Gucci’s Resort 2018 show, Michele brought the brand back to its home in Florence, imbuing his collection with heritage, irreverence, and some kitschy charm. Here are the six things to know about the 115-look show. The SettingFlorence’s Pitti Palace was the […] The post Gucci rewrites history in Florence’s Pitti Palace appeared first on VOGUE India.
  • 1 hour ago

10 lessons in power dressing from Claire Underwood of ‘House of Cards’

To celebrate House of Cards season five coming to our Netflix accounts on May 30, we’re taking lessons in power dressing from one half of the ultimate power couple: Claire Underwood. Robin Wright’s House of Cards character Claire Underwood isn’t just formidable when it comes to politics – her reign continues in the sartorial department. […] The post 10 lessons in power dressing from Claire Underwood of ‘House of Cards’ appeared first on VOGUE India.
  • 1 hour ago