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Alitalia miracle: Profitable in 2017?

Apr 30, 2016

Alitalia confirmed today it is on track to become profitable by 2017, as it reduced its losses by €381 million in 2015 compared to the previous year.

This important result for 2015 comes as the airline announced its first full reporting a year under a three-year turnaround Industrial Plan.

After posting total revenues of €3,312.4 million in 2015, Alitalia was able to report a net result of €-199.1 million for 2015, a significant improvement on the € 580 million loss recorded in 2014. This performance is in line with the targets set in its Industrial Plan.

The Chairman of Alitalia, Luca Cordero di Montezemolo said: “Reducing our losses is a first important step, together with the relentless commitment to improve our services, our fleet and our network with the opening of new strategic intercontinental routes. This has been made possible due to the determination and passion of Alitalia’s men and women to whom I want to extend my heartfelt thanks. Return to profitability in 2017 remains our goal. Today’s results show that Alitalia has become more efficient in controlling costs and is on track for profitability by 2017. All our efforts are focused on reaching that target. Few airlines have undergone such radical change as the new Alitalia. We are delivering on our promise to create a world class airline.”

During 2015, Alitalia met or exceeded a wide range of performance indicators, as it moved forward with its extensive restructuring programme.

The airline carried a total of 22.1 million passengers with a load factor of 76.2 percent.

There was also a strong and growing contribution of €235.4 million from its codeshare partnerships. Its partnership with Etihad Airways has played a major role. Since January 2015, Alitalia and Etihad Airways have shared more than 450,000 passengers between their networks, while more than 1.2 million passengers have been shared between Alitalia and Etihad Airways Partner airlines.

Alitalia continues to deepen its existing cooperation with airberlin to strengthen further air connections between Italy, and Germany, Austria, and Switzerland. Customers benefit from up to 25 per cent more weekly non-stop flights from Italy. The deeper cooperation with airberlin paves the way for enhanced competitiveness, and our common passengers are already benefitting from greater travel comfort, improved connections and a much more attractive route network.

Alitalia’s relationship with SkyTeam, and in particular Delta Air Lines, allows its passengers to enjoy a seamless and consistent travel experience to its extended network in America.

The airline has also achieved significant synergies, operational efficiencies and cost reduction across all areas of the business as a result of increased scalability, systems integration, joint procurement, and the implementation of best practice with its partners.

The airline also started a major fleet upgrade, including new interiors and inflight Wi-Fi being rolled out across all 122 aircraft. Its inflight product has been upgraded, with an enhanced service style to improve quality in all cabins. Investment in lounges will see the new “Casa Alitalia” concept introduced in Rome and Milan Malpensa, while refurbishments are in track for Rome, Milan Linate, Naples, Venice, Catania and New York. A new mobile app has been introduced, as well as the new Ulisse inflight magazine.

More than 6,000 cabin crew and airport staff have undertaken a new Customer Excellence training programme, with leadership training also being run for 600 Senior Cabin Managers and Airport Managers. The airline has also created a new Guest Response Team to provide faster and more efficient customer service.

The new operational procedures resulted in an average 80.2 per cent on time performance in 2015, with mishandled baggage down 50 per cent and technical reliability at 99.5 per cent.

The new changes have already had an impact with guests. Alitalia’s market share to and from Italy increased by four percentage points in 2015, to 30 per cent. In April 2016, overall guest satisfaction was 87 per cent, the highest figure recorded since the start of the new on-board survey in 2012.

Cramer Ball, Alitalia Chief Executive Officer, said: “There is still much to do to reach our long- term goals, but this year has seen our team achieve many significant milestones. The next phase of our investment strategy will see €400 million being committed to fleet, cabins, technology and infrastructure in 2016. Our most important investment to date, and the one bearing most fruit, has been the investment in our people. It is the people of Alitalia who are bringing this brand to life and creating a new force in European aviation. I thank each and every one of the Alitalia employees for their hard work and dedication.”

The airline’s strong results were achieved despite some significant challenges. The fire at Rome Fiumicino airport on 7 May 2015 caused significant disruptions and is estimated to have cost the airline around € 80 million. Alitalia also suspended its Rome-Caracas route due to the Venezuelan government’s decision not to allow the repatriation of US dollars from the country, and like other airlines, it also experienced a negative impact on passenger traffic after the Paris terrorist attacks.

Cramer Ball added: “As an airline, we face many macro-economic challenges. However, the Alitalia of today is ready to face the challenges, moving forward as a commercially successful business. While investment is a key part of our strategy, our management will continue its forensic focus on cost and leverage every opportunity to achieve further efficiencies on our journey to profitability.”

Mr. Ball also welcomed the success of the €375 million bond issued by Alitalia last year, which was a signal of market support for the airline’s progress.

Alitalia’s annual financial statements were independently audited by Deloitte & Touche in accordance with International Auditing Standards.

Alitalia miracle: Profitable in 2017?

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