Alitalia’s board has approved a restructuring plan that aims to return it to profit by 2019 and under which the struggling Italian carrier will cut its narrowbody fleet by around a quarter.
The Italian carrier had originally been targeting returning to profit by the end of 2017 under a plan instigated after Etihad Airways acquired a 49% stake in the airline in late 2014. But Alitalia management, together with advisor Roland Berger, have been working on a new business plan as a toughening operating environment hit its initial profit hopes.
Alitalia says it plans to cut costs by €1 billion ($1.07 billion) by 2019, through reductions in operating costs and manpower. The SkyTeam carrier is aiming to grow revenue by 30% in the same period to €3.7 billion.
As part of the plan, Alitalia will reduce its narrowbody fleet by 20 aircraft by 2018. It operates 77 Airbus A320 family aircraft, Flight Fleets Analyzer shows.
"The airline will increase aircraft utilisation with a particular focus on short and medium-haul aircraft," it says.
The restructuring plan, which will run through 2021, will on 16 March be presented to the Italian government. It will then be presented to the airline's unions, at which it will explain details of the headcount-related measures.
Alitalia says shareholder support for the plan is subject to the airline's unions agreeing to a new collective works agreement and headcount-related measures.
“With the approval today by the board of directors of the second phase of our business plan we can now accelerate our actions towards turning around Alitalia," says the carrier's chief executive Cramer Ball.
Alitalia says the restructuring plan will focus on four areas: Changes to its business model, cost cuts, network optimisation and new commercial initiatives.
As part of the business model changes,the airline plans to add seats to its narrowbody aircraft and charge separately for services like seat selection as it bids to counter low-cost competitors.
Alitalia also plans to re-negotiate existing contracts, grow its network to the Americas and strengthen its presence at Milan Linate, Sicily and Sardinia.
The airline also confirmed the arrival of former chief of Italian broadcaster RAI, Luigi Gubitosi, to replace board member Roberto Colaninno. He will also ultimately take the role of executive chairman once funding of the business plan is finalised, signalling the departure of chairman Luca Cordero di Montezemolo.