Alitalia Group’s new CEO Gabriele Del Torchio is working on a four-year business plan aimed at securing the airline’s survival and reversing losses, which widened by 20% in the first quarter on a 1% rise in revenue.
Del Torchio was appointed in April to replace Andrea Ragnetti, who resigned in February after one year as head of the Italian carrier.
The 2013-16 restructuring plan is expected to be presented to the board of directors at the end of June, the company says. The program will try to increase profitability, control costs and reduce debt, which at the end of March reached €1 billion ($1.29 billion), while total cash and cash equivalents amounted to €159 million.
Alitalia has a long history of losses since its inception in 1946, and has failed to report profits since its re-launch as a fully privatized carrier in 2009. The carrier’s €157 million net loss for the quarter ended March 31 marked a 20% increase on the same period last year, and its €136 million operating loss was 25% higher, year-over-year.
Results in the first quarter were negatively affected by increased competition and the weak economic environment in Europe, specifically in Italy where GDP contracted 2.3%. “To compensate for the decrease in demand, the Alitalia Group has taken measures to optimize its capacity,” the airline says in a statement. Alitalia Group’s load factor improved 1.9 percentage points to reach 70.7% during the period.
Alitalia reinforced its intercontinental and European network by inaugurating new routes from Rome Fiumicino Airport to Pinto Martins-Fortaleza International Airport in Brazil, Prague’s Vaclav Havel Airport, Bilbao Airport in Spain, Copenhagen Airport, Koltsovo Airport in Russia, John Paul II International in Poland, Montpellier-Mediterranee Airport in France and Oran Es Senia Airport in Algeria in March.
The Italian operator’s low-cost unit, Air One, also introduced new domestic services from its hub at Marco Polo Airport in Venice.
Revenue from intercontinental flights increased 11.5%, and revenue on European routes rose 1.1% year-over-year, whereas revenue in the domestic market decreased by 7.4%, reflecting the economic situation in the country and heightened competition from low-cost carriers, which provide almost half of the seats offered on domestic routes in Italy.
U.K. budget carrier EasyJet has 24 aircraft based in Italy and, following a long legal procedure, the London Luton Airport-based airline recently won the right to operate the lucrative route between Milan Linate Airport and Rome Fiumicino, which has long been a monopoly for Alitalia.