Europe's news in English

COPY LINK

ECONOMY

Italy announces plan to take over struggling Alitalia airline

The Italian government has said it plans to re-nationalise the bankrupt former national carrier Alitalia as part of its emergency economic rescue plan to deal with the coronavirus pandemic.

Published: 17 March 2020 10:36 CET

Italy announces plan to take over struggling Alitalia airline

Alitalia, which had already filed for bankruptcy, is struggling further amid the economic fallout of the coronavirus crisis. Photo: AFP

The plan was outlined in a government decree published late on Monday night.

Italian media reported that it could cost taxpayers up to 600 million euros ($670 million) to re-nationalise the airline.

Prime Minister Giuseppe Conte's government on Monday agreed a 25-billion-euro rescue package designed to help families and businesses affected by the economic fallout of an outbreak that has killed more than 2,100 people in Italy.

READ ALSO: 'I have no work': Italy's tour guides, teachers and business owners struggling with the coronavirus crisis

One of the measures provides for the creation of “a new company wholly controlled by the ministry of economy and finance, or controlled by a company with a majority public stake, including an indirect one” to take over the airline.

Italy's AGI news agency said the government was setting up an 600-million-euro fund to deal with the damage the pandemic has caused to the aviation sector.

Photo: AFP

Some of the final details of the Italian economic rescue programme are do to be finalised next month.
Alitalia has floundered in the face of fierce competition from low-cost carriers such as EasyJet and Ryanair.

But analysts warn that it is also too small – and has too many staff for the number of flights it operates – to compete with its rivals.

It flew only 22 million passengers and saw its market share in Italy slip to 14 percent in 2018.
Germany's Lufthansa and the Atlanta-based Delta Airlines each carried around 180 million passengers that year.

Alitalia's attempts to secure rescues from either the Italian state railway Ferrovie dello Stato or Lufthansa failed in January.

The company filed for bankruptcy in 2017.

Member comments

Log in here to leave a comment.

Become a Member to leave a comment.

How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year.

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’, Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn.

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment?

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024 about 1 percent below the estimated structural level.

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending?

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”. The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”.

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025.

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023.

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write.

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers.

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.”

Url copied to clipboard!