Turbulent future for loss-making Alitalia after rescue stalls

Alitalia has been losing money for years, its business squeezed by competition from low-cost carriers, fuel price rises and luxury airlines from the Middle East. (AFP)
Updated 01 December 2019

Turbulent future for loss-making Alitalia after rescue stalls

  • Struggling carrier now at a standstill after a consortium of potential buyers failed to make an offer
  • Alitalia has been losing money for years, its business squeezed by competition

ROME: Efforts to save loss-making Alitalia have reached an impasse after months of unsuccessful negotiations with potential buyers, leaving Italy’s government undecided on the next move.
The struggling carrier, which has been under special administration since 2017 and continues to burn through cash, is now at a standstill after a consortium of potential buyers failed to make an offer, and with little hope for one in sight.
“It’s evident that right now a business solution doesn’t exist,” Economy Minister Stefano Patuanelli said this week, addressing a Senate commission.
The company “has a dimension that the market has difficulty accepting,” he said.
The government has reportedly said it will provide a €400 million ($440 million) bridge loan to the struggling company — at the risk of running afoul of European Commission rules on state aid, after the 900 million provided already in 2017.
Patuanelli brushed off such concerns Friday, saying he was “not worried.” The government, he said, was exploring its options, which media reports said include replacing the commissioners running the airline, or outright nationalization.
The minister has said placing the beleaguered carrier in the state’s hands “would not necessarily be negative.”
Alitalia has been losing money for years, its business squeezed by competition from low-cost carriers, fuel price rises, and luxury airlines from the Middle East.
After months of negotiations and the expiration of the latest deadline for a binding bid, plans for a consortium of investors to save the airline fell through last week after Atlantia said the conditions had not yet been met to participate.
Atlantia, a major operator of toll expressways and airports controlled by the Benetton family, operates Rome’s airports and had already twice taken stakes in Alitalia.
Others making up the potential partnership were state railway Ferrovie dello Stato, US airline Delta and the Italian treasury.
Delta said earlier this month it was ready to invest up to €100 million in Alitalia in return for a 10 percent stake.
Lufthansa has its eye on the lucrative Italian market but has said it would only be interested in investing in a restructured Alitalia.
Patuanelli said Friday that Lufthansa at the moment was interested in “a commercial partnership, but with no equity investment.” The minister has said costs must be cut at the carrier, echoing Lufthansa’s demands for restructuring.
Unions have planned a December 13 strike, their worries mounting given the lack of a new plan in sight and uncertainty over how many jobs could be threatened under any restructuring.
“We are against any idea of cutting up Alitalia and losing our country’s heritage,” the secretary of the CGIL union said on Friday.
Alitalia was placed under special administration two years ago after workers rejected a restructuring plan that would have laid off 1,700 workers out of some 11,000.
Estimates are hard to come by on how much the state would have to spend to keep it afloat. The Sole 24 Ore daily put the sum at 8.7 billion euros, citing Italian investment bank Mediobanca.
The company’s best, or least bad, year in the past decade was 2011, when it lost some €69 million, a sum that swelled to €280 million the following year and to €580 million in 2014, according to Italian news agency AGI.
“The abnormality about Alitalia is that it loses money when it flies,” consumer’s rights association ADUC wrote on Thursday.
“With the money wasted on Alitalia, the government could have bought six airlines, namely Air France, KLM, Turkish Airlines, Norwegian, Finnair and SAS.”


A Jordan startup delivers eco-friendly alternative to dry cleaning

Updated 05 December 2019

A Jordan startup delivers eco-friendly alternative to dry cleaning

  • Products used by WashyWash are non-carcinogenic and environmentally neutral
  • Amman-based laundry service aims to relocate to a larger facility in mid-2020

AMMAN: A persistent sinus problem prompted a Jordanian entrepreneur to launch an eco-friendly dry-cleaning service that could help end the widespread use of a dangerous chemical.

“Dry cleaning” is somewhat of a misnomer because it is not really dry. It is true that no water is involved in the process, but the main cleaning agent is perchloroethylene (PERC), a chemical that experts consider likely to cause cancer, as well as brain and nervous system damage.

Kamel Almani, 33, knew little of these dangers when he began suffering from sinus irritation while working as regional sales director at Eon Aligner, a medical equipment startup he co-founded.

The problem would disappear when he went on vacation, so he assumed it was stress related.

However, when Mazen Darwish, a chemical engineer, revealed he wanted to start an eco-laundry and warned about toxic chemicals used in conventional dry cleaning, Almani had an epiphany.

“He began to tell me how PERC affects the respiratory system, and I suddenly realized that it was the suits I wore for work — and which I would get dry cleaned — that were the cause of my sinus problems,” said Almani, co-founder of Amman-based WashyWash.

“That was the eureka moment. We immediately wanted to launch the business.”

WashyWash began operations in early 2018 with five staff, including the three co-founders: Almani, Darwish and Kayed Qunibi. The business now has 19 employees and became cash flow-positive in July this year.

“We’re very happy to achieve that in under two years,” Almani said.

The service uses EcoClean products that are certified as toxin-free, are biodegradable and cause no air, water or soil pollution.

Customers place orders through an app built in-house by the company’s technology team.

WashyWash collects customers’ dirty clothes, and cleans, irons and returns them. Services range from the standard wash-and-fold to specialized dry cleaning for garments and cleaning of carpets, curtains, duvets and leather goods.

“For wet cleaning, we use environmentally friendly detergents that are biodegradable, so the wastewater doesn’t contain any toxic chemicals,” Almani said.

For dry cleaning, WashyWash uses a modified hydrocarbon manufactured by Germany’s Seitz, whose product is non-carcinogenic and environmentally neutral.

A specialized company collects the waste and disposes of it safely.

The company has big ambitions, planning to expand its domestic operations and go international. Its Amman site can process about 1,000 items daily, but WashyWash will relocate to larger premises in mid-2020, which should treble its capacity.

“We’ve built a front-end app, a back-end system and a driver app along with a full facility management system. We plan to franchise that and have received interest from many countries,” Almani said.

“People visiting Amman used our service, loved it, and wanted an opportunity to launch in their countries.”

WashyWash has received financial backing from angel investors and is targeting major European cities initially.

“An eco-friendly, on-demand dry-cleaning app isn’t available worldwide, so good markets might be London, Paris or Frankfurt,” Almani said.

 

• The Middle East Exchange is one of the Mohammed bin Rashid Al-Maktoum Global Initiatives that was launched to reflect the vision of the UAE prime minister and ruler of Dubai in the field of humanitarian
and global development, to explore the possibility of changing the status of the Arab region. The initiative offers the press a series of articles on issues affecting Arab societies.