The airline Alitalia has triggered bankruptcy proceedings for the second time in the last 10 years, after employees rejected staff cuts and other concessions related to a EUR 2 billion reorganization plan aimed at saving the Italian air carrier.
According to Italian law, the government must provide Alitalia with the necessary funds to continue operations and will appoint representatives to restructure or liquidate the company.
Alitalia, whose main shareholders include Abu Dhabi-based Etihad Airways and Italian banks, announced it has exhausted all options to remain solvent after employees rejected the recapitalization plan involving the elimination of 1,600 jobs.
The Italian Finance Minister, Pier Carlo Padoan, stated that the government will no longer invest money in the airline.
Alitalia’s share of the Italian market fell from 23% in 2007 to 18% in 2015, according to analysts at Bicocca University.
In 2015, Alitalia recorded net losses of EUR 199 million, this being the last year it published financial data. The company has lost nearly EUR 3 billion since emerging from bankruptcy in 2009.
Special administrators will have 180 days to come up with a new plan, with the possibility of the deadline being extended by 90 days. The procedure, intended for large insolvent companies, is designed to protect their assets and employees during the reorganization period.
Source: Wall-Street
Frequently Asked Questions
Why did Alitalia file for bankruptcy?
Alitalia triggered bankruptcy proceedings after employees rejected a €2 billion reorganization plan that included 1,600 job cuts and other concessions.
What happens to Alitalia’s operations now?
Under Italian law, the government will provide bridge funding to maintain operations while special administrators decide whether to restructure or liquidate the airline.
How much money has Alitalia lost recently?
The airline has lost nearly €3 billion since 2009, with its last reported annual net loss being €199 million in 2015.