The European Leaders
14 November 2024
Fiumicino – Alitalia, Italy’s former flagship airline, is heading into its final phase of liquidation, bringing an end to a storied yet troubled history. As part of this process, over 2,000 employees, including flight attendants, pilots, and ground staff, are facing layoffs by the end of 2024. This Alitalia Layoff incident was no surprise still, it is making headlines.
Overview of Alitalia Layoff Plans
Alitalia’s liquidation involves laying off 2,059 employees, which includes 1,100 flight attendants and 82 pilots. This decision is part of Alitalia’s efforts to settle its long-standing financial issues, which culminated in this inevitable outcome. ITA Airways, Alitalia’s successor, is still grappling with its own challenges, particularly as it works toward a merger with Lufthansa, Germany’s major airline.
Why the Layoffs Are Happening?
Alitalia’s financial troubles have been mounting over the years, and these layoffs represent the airline’s last effort to cut losses.
The decision also comes amid ITA Airways’ ongoing discussions with Lufthansa to secure a 49% stake, a merger that could redefine Italy’s aviation sector. However, challenges around valuation and approval processes are slowing this partnership, adding uncertainty to Alitalia’s final days.
Future of Alitalia’s Workforce
The Italian government and airline unions are working to provide some support for affected employees, although specific measures remain unclear. ITA Airways, in its expansion, may consider re-employing some of Alitalia’s skilled workers, potentially creating opportunities for those facing redundancy.
Winners and Losers in Alitalia’s Liquidation
There are always two sides to an effect: positive and negative. In this Alitalia layoff, some are gaining and some are suffering.
Who Could Benefit?
- ITA Airways and Lufthansa: ITA Airways stands to gain operationally as it becomes Italy’s central airline, while Lufthansa benefits from new routes and resources through its ITA partnership. With Lufthansa’s support, ITA could enhance its long-haul network and increase competitiveness.
- Low-Cost Carriers: Budget airlines like Ryanair and EasyJet are likely to capture a portion of Alitalia’s market share, especially on popular domestic and short-haul routes, offering travelers more affordable options.
- Travelers: Increased competition among airlines is expected to lead to lower fares and better services for travelers. Passengers may benefit from expanded route offerings and competitive pricing as ITA Airways and low-cost carriers fill the void left by Alitalia.
Who Could Be Affected Negatively?
- Alitalia Employees: For over 2,000 employees facing layoffs, the liquidation brings financial uncertainty. Many of these workers have served Alitalia for years and now must seek new opportunities in a competitive job market.
- Suppliers and Contractors: Companies that provide services to Alitalia—such as catering, maintenance, and ground handling—are at risk of losing major contracts, impacting their revenue and potentially leading to job losses.
- Tourism and Local Economies: Regions in Italy reliant on Alitalia for connections may see fewer flight options, impacting tourism revenue. Local businesses, such as hotels and transportation services, could experience reduced visitor numbers.
ITA Airways’ Future Post-Alitalia
With Alitalia exiting the scene, ITA Airways has an opportunity to step up as Italy’s primary airline. The potential merger with Lufthansa brings prospects for growth, including access to Lufthansa’s network and increased financial stability.
However, ITA faces intense competition and regulatory scrutiny in Europe, as well as the challenge of building a workforce and operational framework that can sustain growth.
Strategic Considerations for ITA Airways:
- Workforce Recruitment: ITA may absorb former Alitalia employees, particularly those with specialized skills, helping it manage anticipated growth.
- Regulatory Compliance: Ensuring alignment with European Commission standards is crucial for a smooth merger with Lufthansa.
- Customer-Centric Services: To compete effectively, ITA needs to focus on high-quality services, flexible booking options, and attractive loyalty programs to attract and retain passengers.
Conclusion
The liquidation of Alitalia and the restructuring of ITA Airways mark a pivotal shift in Italy’s aviation landscape. While the layoffs represent a challenging period for Alitalia employees and related industries, ITA Airways and Lufthansa could emerge as stronger players in the European airline market.
The success of ITA Airways, however, will depend on its ability to effectively manage workforce integration, maintain regulatory compliance, and cater to evolving customer demands.
As Italy transitions to a new aviation era, the outcome will shape the country’s connectivity, competition, and employment in the years to come.
