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Alitalia will reduce service at Malpensa by half

Deals

Alitalia intends to scrap 150-170 of its 340 daily flights from Milan Malpensa as part of a new business plan aimed at staunching the troubled carrier’s financial bleeding. Air France-KLM is still interested in Alitalia and Iberia.

The airline confirmed last week that it is “no longer able to sustain the negative trend of accumulated and perspective losses.” From both a competitive and an economic point of view, it is “no longer able to operate efficiently out of two hubs,” but management has drawn up a new “plan for survival/transition” aimed at achieving “conditions of sustainability and continuity for company activities in the short/medium term” while waiting for a definitive decision regarding its future ownership.

Without specifying details or concrete numbers, AZ said its survival/transition strategy includes increasing activities at Rome Fiumicino while repositioning Milan Malpensa flights by focusing on specific business segments. Among other initiatives, it plans to develop long-haul charter services through Air Europe as well as consolidating its cargo, crew base and maintenance facilities at Malpensa. It also said it will suspend flights with “strongly negative economic results and with no prospects for recovery in the short term” and cut aircraft from its fleet. It recognized the “need to inject new financial resources through a substantial increase of capital.”

Air France-KLM is open to contacts with Alitalia, CEO Jean-Cyril Spinetta said Wednesday, without detailing under what conditions it would make a bid for the struggling airline.

Alitalia is scheduled to hold a board meeting Friday to discuss its recovery plan. Spinetta said Air France “would listen with interest” if the Italian government makes a proposal. “We are at the stage of evaluation” about Iberia, he said.

Efforts by the Italian government to auction off Alitalia collapsed in mid-July when the last of 11 potential suitors dropped out, saying it couldn’t comply with the conditions set by the government, which included maintaining employment levels. As part of its plan to “promptly” find a buyer, Alitalia said last week it has chosen Citigroup as its financial advisor. The airline loses close to €2 million ($2.7 million) a day. (atwonline.com, iht.com)

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