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Home » Alitalia » Alitalia Files for Bankruptcy in NYC to Protect U.S. Routes
Alitalia

Alitalia Files for Bankruptcy in NYC to Protect U.S. Routes

Matthew Klint Posted onJune 13, 2017 4 Comments

Alitalia USA Bankruptcy

Here’s an astounding statistic: Alitalia serves more than 100 worldwide destinations but its five U.S. destinations account for 30% of all revenue. Even more startling, New York JFK alone accounts for 15% of overall revenue. So with JFK threatening to block Alitalia, it is no surprise that the beleaguered Italian carrier sought bankruptcy protection in New York City today.

U.S. bankruptcy law allows foreign entities access to U.S. bankptucy courts under Chapter 15. Put simply, the U.S. has jurisdiction because of Alitalia’s operations and debt in the USA. It was the Port Authority of New York and New Jersey that prompted this move: Alitalia is not paying its bill and the Authority threatened to terminate Alitalia’s JFK lease today, June 13, 2017, unless Aliatalia settled its debt.

The cash-strapped carrier is simply unable to do that now, but if cut off from JFK — 15% of company revenue from one airport — its road to recovery would become even bleaker.

It appears Alitalia will be able to weather the summer, but its position remains very precarious. Most entities are only interested in purchasing the profitable parts of Alitalia, suggesting the global carrier could be broken up this autumn. Alitalia has indicated it is open to being sold in one piece or in several.

Etihad, itself beleaguered, owns a 49% stake in the company. Foreign asset control laws prevent a greater ownership stake but Etihad does not appear in a position to lend further capital to a perennial loser like Alitalia. Interestingly, Etihad did say it would consider help if Alitalia could extract labor concessions from its workers. Not surprisingly, workers flatly rejected any cutbacks, turning a blind eye to the approaching iceberg.

I’m still hoping to fly Alitalia before the carrier goes under.

CONCLUSION

Bankruptcy court is an interesting thing…now Alitalia can continue to operate at JFK without paying its bills. Alitalia’s strategic bankruptcy filing may only delay inevitable. On the other hand, it could be the most important move Alitalia has made in preserving the value of its brand and company.

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About Author

Matthew Klint

Matthew is an avid traveler who calls Los Angeles home. Each year he travels more than 200,000 miles by air and has visited more than 135 countries. Working both in the aviation industry and as a travel consultant, Matthew has been featured in major media outlets around the world and uses his Live and Let's Fly blog to share the latest news in the airline industry, commentary on frequent flyer programs, and detailed reports of his worldwide travel.

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4 Comments

  1. Mats Reply
    June 13, 2017 at 4:31 pm

    I just need them to hold on until 6/25 as we are flying them to FCO on 6/24. Eager to try their “honeymoon” seats with my wife on a little summer trip to Italy.

  2. Nicole Reply
    June 19, 2017 at 5:10 pm

    Before all of this trouble, I’d booked flights to Italy with Alitalia for October. The price — non stop flights to FCO, from MXP back to JFK — was too good to pass up. Now, I’m so worried my trip will go down the drain. I wish there was some guarantee that flights already sold prior to a certain day would definitely go forward.

    • Matthew Reply
      June 19, 2017 at 6:38 pm

      I’m rooting for you.

  3. Pingback: Alitalia Files For US Bankruptcy, Preventing JFK From Ejecting It

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