The news that Alitalia, the Italian airline, is reluctantly taking the decision to file for bankruptcy is not entirely unforeseen. The troubled airline has been under pressure from all sides, not only has its busiest route – New York to Milan - been hit by the rival airline Emirates started a service between the two cities but also budget airlines Ryanair and Easyjet have 35% of the market between them. Other rivals have expanded and increased their market share by means of acquisition, leaving Alitalia trailing in their wake.
The Italian government is poised to act once it is clear exactly what the shareholders' decision is. Whilst it has repeatedly refused to nationalise the airline it is prepared to assist in minimising "the costs to citizens and travellers" when the time comes.
The airline has struggled for at least a decade rarely showing a profit or anything close to it. The final blow was the rejection of a turnaround and rescue deal by the Alitalia staff which would have seen the release of €900 million worth of new money with which to relaunch the airline. The staff did not vote in favour of the rescue package on the basis of the drastic level of job cuts required to help the airline break even, despite being warned by Italy's Economic Development Minister Carlo Calenda that a rejection would almost certainly result in the appointment of a special administrator and the loss of jobs and the disposal of assets.
Businesses facing insolvency frequently resist taking any action until the very last minute which can be a very counter-productive, not to mention destructive course of action. It is very unwise to go to the wire as rescue packages are far less likely to be viable when a business has run itself into the ground. Giambrone's insolvency expert, Paola Vitali, recommends keeping a close eye on the business and should there be any indicators that the business is beginning to struggle, acting immediately to keep the business on course. Robust action in the early stages can save the business and make it stronger. There is no shame in having problems but there is in failing to take steps to fix them; luckily there are very few business problems that can't be fixed. It is far more cost effective to take advice on how to limit damage to a business than to let it crash without hope of recovery. Giambrone's insolvency experts can assist at any stage to get the best out of a difficult situation.
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