Delta and easyjet might make combined bid for Alitalia
Feb 19, 2019, 7:58 pm
#16
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Perhaps this is more about DL wanting to dominate to TATL market. I also bet they DON'T want a LCC coming in and having an easy way to start up another cheap way to fly into Europe. I think this is more like the AS-VX deal--it's about turf.
Feb 19, 2019, 11:01 pm
#17
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Italy is a huge tourist destination. #5 after France, Spain, US and China, and tourism growth from 2016 to 2017 was much faster than the other four. So there is huge potential traffic from the US-Italy. Imagine if, in additional to JFK-PSA, they dome directs like ORD-PMO, LAX-PSA, or MIA-NAP (they all have runways over 9800 feet). Those would steal a lot of traffic from other airlines.
Feb 19, 2019, 11:40 pm
#18
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The Delta way seems to be throwing good money after bad. I guess an Indian airline wasn't enough of a money loser so they had to go after Alitalia instead. Would someone please remind them that airlines like Pan Am made the same stupid investments.
Feb 19, 2019, 11:57 pm
#19
Join Date: May 2017
Posts: 2,279
The headline on Bloomberg tv last night was that DL/EasyJet will spend $452M USD ($400M EUR). If they can't purchase a controlling stake, that means they value Alitalia at ~$1 billion! Try not to spit out your coffee when reading that! Alitalia is 1) bankrupt and 2) has a dreadful structure that will prevent it from ever being profitable. I really don't get the desire to bailout Alitalia (other than from Italy's perspective where they are trying to save the jobs). If there are really some routes that they really want to have, leverage the AF/KL jv, leasing another couple planes if needed.
Perhaps Delta invisions some form of inefficiencies in the currrent AZ operation contributing to their lack of profitability or they believe their economy of scale can lower operational costs.. If DL is able to turn that around, it just provides them another income source on top of giving them (along w/ AF/KLM) control over additional TATL traffic.
Feb 20, 2019, 6:17 am
#20
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If they can do that, plus eliminate the terminal change when I connect through JFK to AZ metal, I'll be very happy with the deal.
Italy is a huge tourist destination. #5 after France, Spain, US and China, and tourism growth from 2016 to 2017 was much faster than the other four. So there is huge potential traffic from the US-Italy. Imagine if, in additional to JFK-PSA, they dome directs like ORD-PMO, LAX-PSA, or MIA-NAP (they all have runways over 9800 feet). Those would steal a lot of traffic from other airlines.
Italy is a huge tourist destination. #5 after France, Spain, US and China, and tourism growth from 2016 to 2017 was much faster than the other four. So there is huge potential traffic from the US-Italy. Imagine if, in additional to JFK-PSA, they dome directs like ORD-PMO, LAX-PSA, or MIA-NAP (they all have runways over 9800 feet). Those would steal a lot of traffic from other airlines.
Yeah, there are lots of potential passengers for touris, but there wouldn't be good yields, especially if DL tries to expand the routes that are offered. It should've be a matter of profits, not just filling airplanes.
Also, it's hard to see how DL could fix the notorious AZ labor problems, not just strikes but also work rules, entitlements, inefficiencies, attitudes, etc. This airline is a mess, even though you might like the seats and on board F&B service.
Also, it's hard to see how DL could fix the notorious AZ labor problems, not just strikes but also work rules, entitlements, inefficiencies, attitudes, etc. This airline is a mess, even though you might like the seats and on board F&B service.
Feb 20, 2019, 12:01 pm
#21
Join Date: Oct 2009
Programs: Marriott, IHG, Delta, United
Posts: 574
Just as a hypothetical, let’s say all of Alitalia’s TATL routes are profitable. And let’s say, just for discussion, that AZ takes over DL’s FCO-ATL/JFK/DTW, VCE-ATL/JFK, and MXP-ATL/JFK routes.
The total value for DL in that case would be the profit of the existing AZ TATL routes... and the freeing up of up to 7 DL TATL wide-body routes that could be used elsewhere.
The negatives are the issues that have bankrupted AZ in the first place, and that it is very likely DL flies with a lower operating cost than AZ does on the same route.
Strguggling to see how the postives outweigh the negatives, financially speaking.
The total value for DL in that case would be the profit of the existing AZ TATL routes... and the freeing up of up to 7 DL TATL wide-body routes that could be used elsewhere.
The negatives are the issues that have bankrupted AZ in the first place, and that it is very likely DL flies with a lower operating cost than AZ does on the same route.
Strguggling to see how the postives outweigh the negatives, financially speaking.
Feb 20, 2019, 12:15 pm
#22
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Italy is a huge tourist destination. #5 after France, Spain, US and China, and tourism growth from 2016 to 2017 was much faster than the other four.
Investment bankers must be working triple-time to convince investors that the circle can be squared: jobs can be maintained in Italy while investors can expect a decent return on investment.