Are Etihad right in suggesting ‘sexy’ branding will be enough to turn around Italian airline Alitalia?
It is the flag carrier, and national airline of Italy, but in late 2013, Alitalia faced not only the threat of bankruptcy, but the loss of a major fuel supplier, and a potential grounding by Italy’s civil aviation authority. They were backed into economic despair, and their only option was to announce that they were in need of a €500 million rescue package, in addition to a capital increase of 300 million euros.
The capital increase was offered to its existing major stakeholders, including KLM, and Air France, but was refused. Alitalia then approached Etihad, who agreed to come forward and accept the challenge of breathing life back into the Italian airline, by buying a 49 percent stake in the brand last year. The decision came as part of an overall strategy being made by the Middle Eastern airline, who were aiming to grow their network of airlines around the world, in a bid to increase more traffic through their hub.
And with the start of a new year, comes the talks of a brighter, prosperous future for the two airlines. In a joint press conference, hosted in Rome, both airlines discussed their future movements in going forward.
The Alitalia chief executive Silvano Cassano announced;
‘We are confirming out commitment to long-haul. Historically Alitalia is strong in North America and South America, but the great development will be east Asia. We need to fill the gap where Alitalia has been historically weak, because it takes financial resources to buy long-haul planes.’
Whilst the talks held in Rome, were optimistic in their look for the airline, many would argue that Alitalia is going to need to make itself stand out, in order to compete with the tough competition from low cost carriers, and the continuing development of high speed rail within Europe.
Etihad’s Chief Executive Officer, James Hogan, has said; ‘We wouldn’t have invested in Alitalia if we hadn’t thought the industrial plan would be successful. I’ve been told not to say it but I do believe Alitalia can be the sexist brand in Europe in aviation.’
So perhaps its survival will come down to branding – but will that be sufficient enough in giving Etihad the all important return on investment?