Alitalia-Linee Aeree Italiane - History

History

Alitalia - Linee Aeree Italiane S.p.A. was established on 16 September 1946 as Aerolinee Italiane Internazionali, more commonly known as Alitalia, an Italian portmanteau of the words ali (wings) and Italia (Italy). It started operations on 5 May 1947, in which year it carried over 10,000 passengers. The inaugural flight was with a Fiat G.12 Alcione, piloted by Virginio Reinero from Turin to Catania and Rome.

The first intercontinental flight left a year later, flying between Milan and cities in South America. The Savoia-Marchetti SM.95 four engined airliner was used on European routes up to 1949. On 31 October 1957, Alitalia merged with Linee Aeree Italiane and took on the name of Alitalia Linee Aeree Italiane. Alitalia was owned by the Italian Ministry of the Treasury (49%), other shareholders, including employees (49%) and Air France-KLM (2%, now: 25%).

By 1960, Alitalia was operating jet airliner equipment on some European routes (the Sud Caravelle) and the Douglas DC-8 on several longer distance routes.

In 1978 Alitalia had its head office in the Palazzo Alitalia in Rome.

By the 1990s, Alitalia was carrying 25 million passengers annually. In 1997 it set up a regional subsidiary Alitalia Express and in 2001 became a member of the SkyTeam Alliance. In November 2003 Alitalia announced that it would cut 2,700 jobs over the next three years to prepare the airline for a merger with Air France and KLM. In April 2004 Alitalia acquired the bankrupt regional airline Gandalf Airlines to gain additional slots at several European airports, mainly in Milan (Linate) and Paris (Charles De Gaulle).

Alitalia employed 18,182 staff as of March 2007.

Typically, the Pope flies on a chartered Alitalia Jet. The Pope's flight is often nicknamed "Shepherd One" by the press, while the actual callsign is "Volo Papale" (papal flight, in Italian) followed by a serial number.

Alitalia - Linee Aeree Italiane S.p.A. lost money for years owing to problems with pilots and crew members and labour difficulties, and to government and political interference with attempts to solve them. The Italian government supported Alitalia many times until the European Union set a moratorium on any support before 2011. Alitalia - Linee Aeree Italiane S.p.A. did not survive this moratorium. Alitalia - Linee Aeree Italiane S.p.A. went into liquidation in 2008. The viable parts of Alitalia - Linee Aeree Italiane S.p.A. were bought by the private company Alitalia - Compagnia Aerea Italiana on December 12, 2008, which started operations on January 13, 2009.

Alitalia has reported only one year of profit (1998) since its foundation in 1946. Alitalia reported net losses of more than €3.7 billion between 1999 and 2008. Previous state aid to Alitalia included some €1.5 billion in 1998 from the government of premier Romano Prodi. In 2002 Alitalia received a capital increase of €1.432 billion under the government of Silvio Berlusconi. In 2004 the Berlusconi government gave a €400mn 'bridge' loan to Alitalia. In 2005 the capital of Alitalia was increased by €1.6 billion, including an over €500mn bond float issued with the promise of a return to profit in 2006. (Unfortunately the year ended with a loss of €626 million). In 2008 the Italian government gave a bridging loan of €300mn to Alitalia.

The government could in 2006 no longer offer support to the failing airline since it had been forbidden by the European Union to inject new capital. Therefore, as all other attempts to save the company had failed, the Italian government announced its willingness to lead Alitalia towards privatization by lowering its part of ownership in it. Several failed attempts to take over or merge Alitalia were made.

In May 2008 the government issued a decree that would exempt Alitalia from disclosing information on this sale to the market. As a consequence the trade in Alitalia stock at the Borsa Italiana in Milan was halted indefinitely by the stock exchange authorities as of 4 June 2008. Intesa Sanpaolo, as requested by the government, devised a plan in co-operation with the Italian cabinet. The plan was that Alitalia would file for bankruptcy, and thus be protected from its creditors. The next step of the plan was to split Alitalia in two parts, one part containing the debts and less promising parts of the company. After negotiations under supervision of the Italian government Alitalia filed for bankruptcy in August 2008.

In September 2008, Pope Benedict XVI revealed that he was offering his prayer for Alitalia, the official papal airline, after takeover talks broke down.

CAI, Compagnia Aerea Italiana, a consortium of Italian investors, presented a binding offer of €1,100 million to Alitalia's bankruptcy administrator on 30 October 2008 to acquire parts of the airline, pressing ahead despite refusal by some pilots and flight attendants' unions to sign on to the rescue plan. The Italian government and the bankruptcy administrator agreed to the CAI takeover offer on 19 November 2008. The profitable assets of Alitalia - Linee Aeree Italiane S.p.A. were transferred to CAI on December 12, 2008, when CAI paid the offered sum. CAI paid €1.052 billion ($1.33 billion), paying €427 million in cash and taking on €625 million in Alitalia debts. CAI is liable for all Alitalia expenses per 1 December 2008. CAI bought Air One as well.