It has been a long and tortuous quest for profitability for Alitalia over recent years. Five years after being reconstituted as a leaner, privately-owned version of its former self and completing a fleet modernisation programme in 2011, the Italian flag carrier remains dogged by unprofitably. It posted losses of €280 million ($372 million) in 2012.
Like an under-performing Italian football club, Alitalia has hired three chief executives in two years after repeated disappointing financial results and as low-cost carriers continue to make inroads into its home markets.
But under the stewardship of its new chief executive - former Ducati chief Gabriele Del Torchio - Alitalia is hoping to turn things around with a network plan that will see a strategic redeployment of domestic and international capacity.
Alitalia will focus on boosting its long-haul operations with new routes to Nairobi, Seoul, Santiago de Chile, San Francisco and Johannesburg from Rome Fiumcino and Shanghai, Abu Dhabi and Osaka from Milan Malpensa over the next two years.
This will partly be achieved by cutting the number of domestic services from Rome and Milan and using the slots for long-haul services. A new emphasis will be given to its base of Rome Fiumcino, where it will increase its based aircraft. Smaller bases will be maintained at Milan's Linate and Malpensa airports.
Air One, Alitalia's low-cost arm, will withdraw from its Milan Malpensa base to focus its nine aircraft at four bases at Catania, Palermo, Venice and Pisa. It will be rebranded to more closely resemble Alitalia.
Alitalia predicts this new strategy will allow it to achieve positive EBIT by the second half of 2013, to break even by 2014 and make a profit by 2016.
So will it work? According to David Jarach, air transport marketing professor at Milan's SDA Bocconi School of Management, the new plan makes a lot of commercial sense but is fraught with potential difficulties.
"The logic behind Alitalia's plan is the high level of competition on local domestic routes, basically means Ryanair and EasyJet now enjoy the majority of market share in the Italian market and on the intra-European market.
"Alitalia is therefore focusing on long-haul routes to emerging markets with new services to China, South America and Africa."
Innovata schedules data shows that Italy's intra European market is now fractured, Ryanair's nearly 400,000 seats per week making up 23.7% of market share to 24.1% held by Alitalia, Air One and its other subsidiaries. On domestic routes Ryanair accounts for 23% of seats per week to Alitalia's combined 44.6% share.
Source: Innovata schedules data
Traffic data from the Italian civil aviation authority ENAC shows that in 2012 Ryanair carried 16 million international passengers in Italy to Alitalia's 10.3 million.
Alitalia says that to launch its new long-haul routes it will need to add six new aircraft to its fleet by 2016, but Jarach has his doubts of how the airline will be able to procure them. "It will be quite a problem to turn from strategy and execution, basically they will need to welcome new Airbus A330s which will strengthen the long-haul fleet - the question is how will they finance these aircraft?"
Jarach says another option is for fellow SkyTeam member and Alitalia minority stakeholder Air France to "pass on" some A330s on favourable terms, but the airline's debt pile will still make it difficult for Alitalia to achieve its objectives.
"They will need a huge financial support to reach their 2016 target this means they will have to find new credit lines and shareholders to support its plans and this will take at least a couple of years, but we are already in 2013."
Alitalia's new strategy is built around a new emphasis on its Rome operations. This offers some significant potential cost savings. By keeping approximately 25 aircraft based at Rome Fiumicino airport rather than the eight or nine at present, Alitalia can save on the costs of basing crew and equipment in far flung places.
Then there is the realignment of frequencies. Early morning services to destinations such as Milan will be given over to international and long-haul services. According to Jarach this makes a lot of sense given the traffic to international markets will be much higher yield than domestic passengers.
Reducing Milan-Rome frequencies could also be driven by the fact Alitalia lost its monopoly on the key Fiumicino-Linate route in March when EasyJet launched its own service linking the capital with Milan's downtown airport.
As Alitalia withdraws domestic services in favour of international services, it wants Air One to fill the gap, much as Lufthansa is doing with its outsourcing of operations to Germanwings.
As part of this Air One will move out of its Milan Malpensa base, but seat data for the north Italian airport reveals that this is already happening.
Innovata data shows Air One has cut seat capacity at Malpensa by 53% since August 2012, from 24,000 seats per week to 11,000.
Source: Innovata schedules data
Jarach believes that Alitalia's decision to put Air One capacity into Catania is driven by the grounding of Windjet in 2012.
"Moving out of Milan to improve capacity at Catania makes sense. It used to be a fortress of Windjet, that has now gone into bankruptcy, which opens up new opportunities."
Traffic data from ENAC shows the route between Catania and Rome Fiumcino was the busiest domestic route in Italy last year, while the Rome-Palermo route was third highest.
Flightglobal's FlightMaps Analytics data shows that Alitalia only competes with Blue Panorama and Meridiana on Catania-Rome routes with an 80% share of seat capacity. On the Rome-Palermo route, Alitalia faces competition from EasyJet but is still the dominate player in the market.
But Jarach remains pessimistic of Air One's ability to grow to get the necessary "critical mass" it needs to become a viable low-cost carrier.
"Air One needs more aircraft to grow with a critical mass but Air One does not have the kind of low-cost ethos that is needed in its DNA."
For Jarach, the best option for Alitalia to build a critical mass in domestic markets would be a merger with fellow Italian carrier Meridiana, which would give the combined airline a strong presence across the Italian peninsula. In May, when such suggestions surfaced in local media, Alitalia issued a statement categorically denying any possibility of a merger with Meridiana.