Over the past few years Alitalia has positioned itself closer and closer to bankruptcy. The Italian government had hoped to sell it to others interested in operating the carrier, but the last two suitors, Aeroflot (yes Aeroflot expressed interest) and Air One, a small Italian carrier finally decided to pull out. Now the government is threating to sell of the airline piece-meal if no one comes forth with a bid of 1 Euro to operate the whole airline. Seems to me this would be a fine opportunity for AA to increase flying to Italy, as Alitalia already flies from New York, Boston, Chicago, and Miami to Italy. AA also has 777-200ss, 767-300s, aging MD-80s as well as ATRs (as well as MD-11s and Airbuses) that would be available if the Italian government begins to sell off every asset that might help in a transition if AA picked up some of these US-Italy routes. One of TWA's most profitable routes had been JFK-Milan as lots of business people flew this route, and I would think that AA may be able to cherry pick some of these routes as they have excess capacity in their JFK terminal, and also could produce extensive feeders at MIA and ORD.

Here is a recent press release about the problems facing Alitalia.


Options Running Out To Save Alitalia
July 24, 2007
Italy is happy to sell Alitalia to anyone willing to turn the loss-making national airline around -- no matter where the new owners come from, an Italian minister said.

Embarrassed by the collapse of Alitalia's auction last week when the last bidders pulled out, Rome is now scrambling for new options to sell the airline and prevent it from being shut down.

"If they can make it work, we welcome even Eskimos or the Chinese," said European Affairs Minister Emma Bonino said at a news conference. "That would be satisfying from the point of view of Italian consumers."

Several bidders in the seven month auction had pulled out citing restrictive terms imposed by Rome on the sale -- which include maintaining the "Italianness" of the airline. The final contenders included Russia's Aeroflot and a US private equity group.

Another Italian minister last week compared Alitalia to a diseased limb and suggested selling it off for one euro to anyone willing to take it off Rome's hands or letting it go bankrupt.