On Tuesday, Alitalia SpA, a national airline company based in Italy, announced that it made the final decision to start bankruptcy process, after workers declined its rescue plan last week. This is the second time in a decade that the company started bankruptcy proceedings.
The company said that the 2 billion-euro refinancing plan rejected involved 1,600 job losses, and after that, it had no option to stay solvent. Under the Italian law, once under administration, the government will appoint one or several supervisors to assess whether the company could be restructured, being a standalone company or through sale partially or totally, or liquidated. The company said that its flight schedule will remain unchanged.
According to people who knows about the deal, the state will give the company a bridge loan of around $545 million to maintain its operations in the following months. Without the help of government, Alitalia might run out of cash by the middle of May, because it is currently losing around $1.1 million a day.
“It is clear this business requires fundamental and far-reaching restructuring to survive and grow,” James Hogan, the Chief Executive Officer of Etihad, said in a statement. “Without the support of all stakeholders for that restructuring, we are not prepared to continue to invest.”