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Progress For Alitalia On Etihad Airways Turn-Around Road Map

During Alitalia Day in Rome last Wednesday, the airline’s Chairman Luca Cordero di Montezemolo, Vice Chairman James Hogan, and CEO Cramer Ball touted the success thus far of the airline’s ambitious turn around plan while emphasising that there is still work to be done.

Alitalia’s reboot began in January 1, 2015. A €1.76 billion recapitalisation which wiped out historic debt and a fresh influx of €560 million invested by Etihad Airways which gave the Abu-Dhabi based carrier a 49% equity stake in the Italian carrier.

In addition to capital raised, Etihad helped Alitalia by developing a comprehensive three-year program of organisational, operational and service improvements which were intended to return Alitalia to profitability and keep it there.

Program milestones have included the launch of new intercontinental, international and domestic routes; the introduction to the fleet of new aircraft, new livery, and new aircraft interiors; new airline partnerships, gained through joining the Etihad Airways Airlines Group; improved connections at Rome’s Fiumicino airport; and a renewed focus on product and service improvements.

“Positive and meaningful change continues at pace in every area of the business,” said Montezemolo. “Alitalia has a strong new commercial focus and greater emphasis than ever before on delivering signature Italian hospitality.”

Italian hospitality, and embracing the essence of Italian culture, was the core message of the airline’s new brand strategy revealed last week through the introduction of new crew uniforms and a new media campaign.

Change Adds Up

Alitalia’s recently released financial results for 2015 show that all this change has added up to significant gains for the airline. Though losses continue, they were reduced by €381 million in 2015. That figure was in line with targets set in the industrial plan, the airline states.

  • Alitalia’s market share also grew to more than 30% to and from Italy, which was a rise of 4% per cent compared to 2014.

“Few airlines have undergone such radical change as the new Alitalia and it is now reaping the benefits of a robust new strategy built around dynamic and effective partnerships. After some difficult and challenging years, Alitalia has a great story to tell. We promised to create a world-class airline,” said Alitalia Vice Chairman James Hogan. “We are delivering on that promise and Alitalia today is as good as any airline in Europe.”

“We are only half-way through a three-year journey to deliver profitability. The airline is already unrecognisable from its predecessor. Customers are winning through greater choice and better products and services,” Hogan added.

It’s Who Knows You

Earlier this year, Alitalia Vice Chairman, and Etihad Airways Aviation Group CEO James Hogan, said partnerships are essential to the success of airlines in the future.

The group is committed to proving that through its own Etihad Airways Partners alliance by investment model, though certainly the Joint Ventures and Groups created by competitors, including IAG, would back up Hogan’s claim.

Under the leadership of Etihad Airways, the Etihad Airways Partners group includes: airberlin, Air Serbia, Air Seychelles, Etihad Regional operated by Darwin Airline, Jet Airways and NIKI.

Like traditional alliance models, it aims to extend the network range of members, but Etihad Airways has used the investment proposition to take a more active role in the harmonisation of Group brands than ordinary ‘vote in’ alliances offer. The aim is that customers benefit from a more consistent travel experience even when connecting and an extended frequent flyer program.

Group strategy also offers benefits to the operators of efficiencies of scale, and extended purchasing power.

Alitalia values the savings from joint negotiation for procurement at more than €13.5 million since January 1, 2015. Buying in bulk has always been a smart move, if nothing is wasted.

As Hogan says, such partnerships are essential in a market which larger players benefiting from more liberal Open Skies policies have already effectively consolidated by association.

  • The Etihad Airways Partners Group distribution of traffic has resulted in 470,000 passengers shared between Alitalia and Etihad Airways since January 1, 2015, and more than 1.2 million passengers shared between Alitalia and Etihad Airways Partners airlines.

Alitalia codeshares with Etihad Airways, airberlin, Air Serbia, Jet Airways, Air Seychelles and Etihad Regional and provides ground handling in Rome for Etihad Airways, Air Serbia and airberlin. Alitalia also manages the operations control centre for Etihad Regional.

Alitalia recently announced a strengthening of its commercial relationship with airberlin with a 25 per cent increase in weekly frequencies on non-stop flights from Italy. It will codeshare with airberlin on more than 1,400 flights per week on 91 routes, including 56 non-stop services and 750 weekly flights between Italy, Germany, Austria and Switzerland.

“Alitalia is regaining strength and controlling its destiny, working hard with quality partners to drive revenue,” said CEO Cramer Ball.

What is Good for Alitalia Is Good For Italy, and Vice Versa

A lot of time was spent during the event reassuring employees, Italians and the press present that the turn-around efforts at Alitalia are on track.

The airline has announced new international destinations, including service to  Santiago which launched this May, new flights to Mexico City starting in June, and flights to Beijing programmed to begin in July.

But Alitalia has also committed to its domestic market, with expanded service in southern Italy, Sicily and Sardinia, with more than 400 weekly frequencies connecting southern and northern Italy on the 2016 Summer schedule.

But the clear message was that all sacrifices made to date, and those to come, are now and will have been in future, will pay off for the airline, its stockholders and partners, and the country through greater economic stability and employment.

“Alitalia’s people are winning through a growing company that offers new career opportunities. Italy is winning as we build an airline Italians can be proud to fly and call their own. Alitalia is building a competitive and sustainably profitable future that will deliver financial stability and long-term growth,” said Hogan.

At the Heart of Everything

While presenting hard numbers, the polished message pivoted around the airline’s source of revenue: customers.

“As our evolution continues, we will remain totally focused on putting our customers at the heart of everything we do and deliver value through relevant and impressive services and products,” said Ball.

Alitalia will invest €400 million in 2016 on fleet, cabin products, technology and infrastructure.

More than 6,000 of Alitalia’s cabin crew and airport staff have gone through new specialised customer service training. The airline established a new Transit Team at Alitalia’s Rome Fiumicino hub, and invested €25 million in ground support equipment, new faster boarding procedures, and more staff on duty at airport gates.

The climax of this customer-facing strategy was revealed with Alitalia’s new ‘Made of Italy’ campaign, an enticing invitation for customers present and future to savour everything Italy has to offer.

Mr Ball added: “We are showing our customers that the new Alitalia stands for great service, quality and that it represents the best this great country has to offer. Our product, service and punctuality have changed to best-in-class and we are passionate about providing the highest levels of service and quality. We are the new smart choice in European air travel.”

Keep At It, All ‘A Ya

Alitalia is on a mission, has a map, and is sticking to it.

“We are also firmly focused on our goal to become profitable because profit will enable further growth in the years ahead through reinvestment. That means fighting harder on cutting costs, increasing revenue, and increasing productivity by becoming more efficient.” Ball added.

Montezemolo credited the people of Alitalia for the success to date of turn-around efforts at the renewed flagship carrier.

“Everything we are achieving is a result of the dedication and commitment of the people of Alitalia and I publicly salute their incredible effort and hard work,” he said.

The Chairman also emphasised that the job of turn-around continues, requiring an ongoing commitment from all.

“We are creating a bright future by delivering the transformation that we promised. Alitalia today is a modern, leaner and energised business. We are reducing losses and will be profitable by 2017 if we remain totally focused.”

Featured Image: Alitalia Crew sporting new uniforms. Source: Alitalia

Rome wasn’t built in a day, but the Empire grew milestone by milestone.

1 thought on “Progress For Alitalia On Etihad Airways Turn-Around Road Map”

  1. Pingback: One Year On, Remembering Alitalia's New Uniforms | Flight Chic

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