Alitalia seeks 10% cut in lease rates to cope with higher fuel costs

London
Source: Flightglobal.com
This story is sourced from Flightglobal.com

Alitalia is seeking a 10% discount from all its suppliers as it looks to mitigate the effect of rising fuel prices.

In a letter to all operating lessors and suppliers, obtained by Flightglobal, the carrier warns the early cancellation of leases are a possibility if the request is not met.

The letter states the airline has been put under "extreme pressure by the steady rise in fuel prices, which is going far and even beyond any reasonable expectation".

The carrier says a "strong action to rationalise" its current costs "shall be realised by a 10% reduction on the current rates applied on all our partners in the supply chain".

It adds that "should this request not be met, it shall be unavoidably forced to put in place different and stronger actions", which could include "reconsidering our fleet size" which would lead to "the subsequent early termination of our current lease agreement" as "the first option".

Alitalia has been undergoing a deep restructuring process since the beginning of 2009.

"At this stage and with the firm belief to be part of an entire production system, we deem consistent to involve all of our suppliers in a common effort in what we consider a critical phase for the airlines."

Alitalia posted a net loss of €201 million ($261 million) in the first half of 2012, compared with a €94 million during the same period in 2011. The carrier attributed the operating performance to higher fuel prices, which increased to $115.1 per barrel this year, compared with $107.6 dollars in the first half of 2011.

Alitalia could not immediately be reached for comment.