Italy to re-nationalize Alitalia in response to virus

Alitalia filed for bankruptcy in 2017 and looked doomed in January when it failed to secure rescues from either the Italian state railway or Germany’s Lufthansa. (AFP)
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Updated 17 March 2020

Italy to re-nationalize Alitalia in response to virus

  • Prime Minister Giuseppe Conte’s decision was revealed in a government decree published late Monday
  • Alitalia is currently 49-percent owned by Etihad Airways and 51-percent owned by the Italian management team

ROME: Italy’s government said Tuesday it will re-nationalize the bankrupt former national carrier Alitalia to make sure crises like the coronavirus pandemic never strand its compatriots abroad.
Prime Minister Giuseppe Conte’s decision was revealed in a government decree published late Monday after more than a week of debates.
It comes as part of a broader $28 billion (€25-billion) coronavirus response plan and will reportedly cost Italian taxpayers up to $670 million (€600 million).
The 74-year-old company filed for bankruptcy in 2017 and looked doomed in January when it failed to secure rescues from either the Italian state railway or Germany’s Lufthansa.
“At a time like this, a flag carrier gives the government more leeway,” Deputy Economy Minister Laura Castelli told Italian radio.
“We all saw the difficulties our compatriots faced in returning to Italy. Our decision stems from this.”
Transport Minister Paola De Micheli said a “national carrier was strategic for our country” at a time of crisis.”
Alitalia faced the threat of closure even before COVID-19 killed more than 2,100 people in the Mediterranean country and grounded the overwhelming majority of most airlines’ flights.
Market intelligence firm CAPA warned that “most airlines in the world will be bankrupt” by the end of May.
But how Conte’s government intends to save Alitalia — a member of the SkyTeam alliance that has been bleeding money for many years — remains unclear.
The government decree provides for the creation of “a new company wholly controlled by the ministry of economy and finance, or controlled by a company with a majority public stake, including an indirect one.”
Italy’s AGI news agency said the government was also setting up an €600-million fund to deal with the damage the pandemic was causing the aviation sector.
Some of the final details of the national economic rescue program are expected to be finalized next month.
Alitalia began to flounder with the emergence of budget fliers such as EasyJet and Ryanair in the 1990s.
But analyst believe that it is also too small — and has too many staff for the number of flights it operates — to compete with full-cost rivals.
It flew only 22 million passengers and saw its market share in Italy slip to 14 percent in 2018.
Lufthansa and the Atlanta-based Delta Airlines each carried around 180 million passengers that year.
Alitalia was privatized by a group of Italian investors for one billion euros in 2008 but went into administration when its staff rejected a proposal to cut jobs in 2017.
It is currently 49-percent owned by Abu Dhabi-based Etihad Airways and 51-percent owned by the Italian management team.
Etihad made no immediate comment.


Thailand finance minister: economy to recover next year with 4% growth

Updated 23 November 2020

Thailand finance minister: economy to recover next year with 4% growth

  • Economy had bottomed but recovery was not fast as the battered tourism sector hurt supply chains
  • Budget for the next fiscal year will still focus on boosting domestic activity

BANGKOK: Thailand’s economy is expected to grow 4 percent in 2021 after a slump this year and fiscal policy will support a tourism-reliant economy struggling from the impacts of the coronavirus pandemic, the finance minister said on Monday.
Southeast Asia’s second-largest economy shrank a less than expected 6.4 percent in the third quarter from a year earlier after falling 12.1 percent in the previous three months.
The economy had bottomed but recovery was not fast as the battered tourism sector, which accounts for about 12 percent of gross domestic product (GDP), has also hurt supply chains, Finance minister Arkhom Termpittayapaisith said.
“Without the COVID, our economy could have expanded 3 percent this year, he said. “As we expect a 6 percent contraction this year, there is the output gap of 9 percent,” he told a business forum.
“Next year, we expect 4 percent growth, which is still not 100 percent yet,” Arkhom said, adding it could take until 2022 to return to pre-pandemic levels.
There is still fiscal policy room to help growth from this year’s fiscal budget and some from rehabilitation spending, he said.
The budget for the next fiscal year will still focus on boosting domestic activity, Arkhom said, and the current public debt of 49 percent of GDP was manageable.
Of the government’s 1 trillion baht ($33 billion) borrowing plan, 400 billion would be for economic revival, of which about 120 billion-130 billion has been approved, Arkhom said.
He wants the Bank of Thailand to take more action short term on the baht, which continued to rise on Monday, despite central bank measures announced on Friday to rein in the currency strength.
“They have done that and they have their measures... which should be introduced gradually and more intensely,” Arkhom said.