Alitalia en route to profitability as losses sharply reduce in 2015

Alitalia, the airline that is 49 per cent owned by Abu Dhabi’s Etihad Airways, is on track for its first profit in decades following the announcement of sharply reduced losses for 2015. Luca Cordero di Montezemolo, the Italian carrier’s chairman, said that losses were €381 million lower last year than in 2014. “Return to profitability […]

Alitalia, the airline that is 49 per cent owned by Abu Dhabi’s Etihad Airways, is on track for its first profit in decades following the announcement of sharply reduced losses for 2015.

Luca Cordero di Montezemolo, the Italian carrier’s chairman, said that losses were €381 million lower last year than in 2014. “Return to profitability in 2017 remains our goal. Today’s results show that Alitalia has become more efficient in controlling costs and is on track for profitability by 2017. All our efforts are focused on reaching that target. Few airlines have undergone such radical change as the new Alitalia. We are delivering on our promise to create a world class airline”.

Etihad took its stake in 2014, pledging to turnaround the Italian airline, which had been chronically loss-making and teetering on the verge of bankruptcy under state and corporate ownership. The UAE airline’s strategy was to expand Alitalia operations via its own “partnership” strategy, feeding long haul flights from Italy through to Etihad’s global network and making Alitalia’s Rome base a hub for European flights.

There was also a focus on cost control and new investment – with €400m earmarked for this year – on new aircraft and facilities.

Alitalia also started a major fleet upgrade, including new interiors and inflight Wi-Fi being rolled out across all 122 aircraft. Its inflight product has been upgraded, with an enhanced service style to improve quality in all cabins.

Investment in lounges will see the new “Casa Alitalia” concept introduced in Rome and Milan Malpensa, while refurbishments are on track for Rome, Milan Linate, Naples, Venice, Catania and New York.

Mr di Montezemolo added: “Reducing our losses is a first important step, together with the relentless commitment to improve our services, our fleet and our network with the opening of new strategic intercontinental routes. This has been made possible due to the determination and passion of Alitalia’s men and women to whom I want to extend my heartfelt thanks.”

After posting total revenues of €3.3 billion in 2015, Alitalia reported a net loss of €199.1m for 2015, a significant improvement on the €580m loss recorded in 2014. “This performance is in line with the targets set in its industrial plan,” the airline said in its results statement.

“During 2015, Alitalia met or exceeded a wide range of performance indicators, as it moved forward with its extensive restructuring programme,” it added.

The airline carried a total of 22.1 million passengers, a load factor of 76.2 per cent.

There was also a contribution of €235.4m from its codeshare partnerships, in which Etihad played a major role. “Since January 2015, Alitalia and Etihad Airways have shared more than 450,000 passengers between their networks, while more than 1.2 million passengers have been shared between Alitalia and Etihad Airways Partner airlines,” the statement said.

“Alitalia continues to deepen its existing cooperation with airberlin – another Etihad partner – to strengthen further air connections between Italy, and Germany, Austria, and Switzerland. Customers benefit from up to 25 per cent more weekly non-stop flights from Italy. The deeper cooperation with airberlin paves the way for enhanced competitiveness, and our common passengers are already benefitting from greater travel comfort, improved connections and a much more attractive route network,” it added.

The airline’s strong results were achieved despite some significant challenges. The fire at Rome Fiumicino airport a year ago caused significant disruptions and is estimated to have cost the airline around €80m.

Alitalia also suspended its Rome-Caracas route due to the Venezuelan government’s decision not to allow the repatriation of US dollars from the country, and, like other airlines, it also experienced a negative impact on passenger traffic after the Paris terrorist attacks.

Alitalia chief executive Cramer Ball added: “As an airline, we face many macro-economic challenges. However, the Alitalia of today is ready to face the challenges, moving forward as a commercially successful business.”

On Wednesday, Etihad announced record financials for 2015, with profits soaring 40 per cent to $103m, as the global partnership strategy of taking equity stakes and doing codeshares with other airlines made a major contribution to operations.

fkane@thenational.ae

Source: Business

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