16 experts advise on what’s to come this year.
Alitalia chief commercial officer Fabio Maria Lazzerini
The proposal process to determine the future of Alitalia is
winding down, but executives insist the carrier will not accept a marriage of
desperation. New chief commercial officer Fabio Maria Lazzerini said Alitalia's
financial situation has improved since it began
bankruptcy proceedings this year. Saying things are "business as
usual," Lazzerini spoke with BTN transportation editor Michael B. Baker
about Alitalia's outlook and how the proceedings are affecting its
relationships with corporate partners.
BTN: What's the
status of the administration process?
Oct. 16, all the potential companies interested in Alitalia [needed] to declare
themselves officially. They have until Nov. 5 to present their offers. The
offers will be binding offers for the ones presenting their offers, not for
Alitalia. Alitalia management along with the commissioners and the government
will evaluate the offers. The preference will be for the bidders that create an
offer for the entire company, not for small pieces of it. The government
intends to keep the company whole, Italian and operating out of Italy and
keeping the name. We then will open individual negotiations with potential
bidders to improve those bids.
happening with operations?
company is launching its new service for the winter season. We are already
planning new service for the summer season. For the first time after three
years, revenues are up compared with the previous year. The first six months of
the year, EBITDA was positive by €46 million. Last year was negative. We are
planning to grow EBITDA. It doesn't mean we will not generate losses but much
lower than the previous years. This is important for the stability of the
company, despite what happens with the process. When the administration started
on May 2, the government gave Alitalia a bank loan of €600 million, more
or less, to protect the company and make sure Alitalia could continue to
operate. That has not been touched yet because Alitalia managed to generate
enough cash to sustain itself. That allows us to have long-term planning.
The [Italian] Civil Aviation Authority gave back to Alitalia
the unlimited license to fly [after] 10 months [with] a temporary one. The
commissioners have the power of reducing costs even further because they can
terminate any contract at their own will. Some costs have been terminated like
a contract on the fuel price, which was way negative for Alitalia. Other
contracts represent further opportunity of savings. …
We are completely redoing Alitalia.com, making it much more
modern and more integrated not only with the sales process but the check-in and
The government intends to keep the company whole, Italian and operating out of Italy and keeping the name."
BTN: What about
with corporate business? Are you continuing to negotiate and renew contracts
with corporate travel programs and travel management companies?
are important. We are talking with the direct customers and can partner even
better with the TMCs. We are reinforcing the team looking after the global
corporate accounts, both [agency] and companies. A new VP joined to be
responsible for global sales to bring back focus on this side of the business
because it is the most profitable one. We need to balance [business from
Italian companies], which is 45 percent of the overall revenues of Alitalia, with
the relationships outside Italy.
Italy is a market where [small and midsize enterprises] are
very important. Something like 95 percent of the Italian companies are below
200 employees; you cannot go for a super-corporate global agreement, but
they're important. We have a program called Alitalia BusinessConnect. It's
basically a program where both the company and the flyer accrue miles they can
BTN: Are you
retaining customers, or has there been attrition?
wasn't [attrition]. There were some ups and downs, especially during February
and March. Aviation with the [travel agencies] is extremely strong. Globally,
very few are reducing revenues with us. Most of them are growing. We kept in
extremely constant relations with the [agency] partners. It's easy to go and
face a customer when everything goes well. It's not easy when you sit down in
front of a customer and they ask, "Are you still there? Did you go
bankrupt? Are you closing down?" But they're partners, and we need to give
them all the information because then they are facing their own customers,
which are our customers, as well. … We renewed completely the [agency]
contracts, the commission-based incentives. We are honoring our obligations
BTN: What is the
route growth you mentioned?
Lazzerini: We are
launching Male [in the Maldives and] New Delhi at the end of the month, and we
are operating Los Angeles for the winter season. We are planning further growth
next summer, something in Africa. Potentially, we will work with [Delta through
our joint venture] to see if there are other opportunities to increase
frequencies or coverage of North America. We have integrated [with Delta] and
are pushing to be even more integrated. I'm not saying all the problems of
Alitalia have been solved. It still needs a strong partner, which can be a
financial institution, an investment fund, another legacy carrier, a low-cost
carrier, a European carrier. Alitalia needs to be reinforced because we need to
increase our capacity to operate a long-haul network.
BTN: You had your
own plan before administration began. Will your choice of which proposal to
accept depend upon that?
Lazzerini: We are
presenting our own plan. It doesn't mean we'll have only one partner. It could
be an investment partner and another airline. We have a standalone plan, which
would be with an investment fund, where the majority of the development is on
long haul. We have other plans where we can mix our plan with a potential
carrier that is going to invest in the company. Our goal is to increase the
long-haul connectivity. That's the only way. We can still compete well with the
low-cost carriers, but we cannot do only that; it can be a portion to feed our
long-haul connections. The [other] component is the medium haul, the connection
between Italy and European cities where EasyJet and Ryanair are working with
very low fares. They have low costs, which we don't have. We could go to low
fares, but then we lose money. We can [use] our network to feed the
international flights and be creative in other connectivities. We have always
competed with the high-speed train, but ... there can be some integration
I'm not saying all the problems of Alitalia have been solved. It still needs a strong partner, which can be a financial institution, an investment fund, another legacy carrier, a low-cost carrier, a European carrier."
BTN: Where else do
you see future growth?
have strong connectivity with South America. North America is important, and we
are working constantly with our joint-venture [partners], especially Delta, to
see if we can [increase] capacity. Africa can be another good destination,
given the position of Italy. Then we have the East, where we have a presence in
Korea and Japan. We do not have enough good coverage in China. We are asking
desperately for new slots, but it's difficult to get them. We try to find
routes where we can combine leisure and business. Purely leisure destinations
don't pay off enough, [though] Male is an exception.
BTN: Will you
deepen partnerships with carriers in Asia?
Eastern is a partner, and Korean is a partner, as well, through SkyTeam. In
China, even if we increase and open other gateways, it's impossible [to have
full coverage] because it's basically a continent, so strengthening our
partnerships there is crucial.
happening at the management level?
management has been heavily redesigned. I joined one month ago. The head of HR
joined one month ago. Head of legal joined six months ago. In the past six
months, the commissioners terminated 32 of the top managers, the foreigners who
came during the Etihad period, so there is some fresh air coming in. I've been
the general manager of Emirates for four years. I always heard people saying
that the [employees] at Alitalia are very good. It's very true. The revenues
are coming in despite this situation, especially on the Italian market. One of
the reasons Chapter 11 exists is to allow the company to reshape its future.
You need that phase to go back to your roots and decide what you want to be.
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