What Draghi and Giorgetti can do on Alitalia

14 February 20213 years ago babelfish

The failure of the extraordinary administration of Alitalia, the public money thrown to the wind and the prospects with the Draghi government. The analysis by Gaetano Intrieri

The carelessness and the total lack of any corporate strategy have certainly characterized these 4 years of Alitalia's extraordinary administration. In fact, in the country where the concept of one is worth one or the concept of indifference as if it were a macumba once every 100 years about a conspicuous part of the Italian electorate attacks, what has happened and is happening in what was once the Italian flag carrier it was quite logical and easy to predict. Anyone who reads Start knows that for at least two years I have been writing how it would have ended in Alitalia.

Air transport is a very complex business model since it is characterized by an extreme multitude of exogenous variables and the real challenge for those involved in air transport is to intercept and prevent as many of them as possible. Airlines such as Southwest or like Ryanair itself, have become real benchmarks in the most important MBAs in the world, or are brought as a "case study" because they are efficient and effective organizational models within a business model strongly conditioned by complexity and technology. Nowadays, virtuous aviation is the one oriented to the maximum possible efficiency that must characterize the internal process mechanisms and that can only be achieved through the study and constant research in implementing increasingly complex management control models aimed at intercepting and preventing an increasing volume of exogenous variables.

In this context of complexity and continuous technological innovation, Alitalia has had the only mistake of finding itself for several decades as an airplane without a pilot whose end could only be that of going to crash. Now unfortunately the mountain is really very close and what was once the glorious flag carrier of this country is one step away from putting the planes to the ground to the delight of many Italian taxpayers who legitimately see Alitalia only as a tireless devourer of public money instead. that an opportunity for a country with a tourist vocation that should give up everything except to have its own national airline as an indispensable tool to favor the process of tourist "incoming" and consequently the growth of the Gross Domestic Product.

The four years of extraordinary administration, instead of being an opportunity for the company in order to restructure itself in a serious and coherent way with what air transport requires today, proved to be a "failure within a bankruptcy", characterized by endless waste and from far more serious inefficiencies than those that had caused the insolvency declared in 2017 by the court of Civitavecchia. And to think that Alitalia, due to the pandemic, had the greatest opportunity in terms of "disruption" that could ever have happened to it, relying on a sector crisis of epic proportions that would have allowed it to reduce the gap with its competitors in industrial terms and managerial and at the same time it would certainly have made the indispensable restructuring of internal processes and the value chain easier. That, and only that, could have been the road that would have allowed this country to have an absolutely strategic flag carrier and at the same time could have saved the future of many workers. Today at least 20,000 people, also considering Alitalia's activities, find themselves like ghosts whose future hangs beyond belief and total uncertainty. Just considering the municipality of Fiumicino, where more than 5 thousand Alitalia employees reside, which become about 10 thousand with the alitalia crash would have devastating consequences for the entire municipality. We are therefore faced with a social drama that goes well beyond the corporate perimeter.

But, since we are the country of prevailing "fancazzismo", instead of pursuing in a serious and respectful way the only possible way, that of restructuring the company in extraordinary administration, here is that about 1 years ago, someone came in mind of giving birth to the unfortunate idea of building a new Alitalia, provisionally called ITA, outside the perimeter of the extraordinary administration and entrusting it to professionals totally divorced from the air transport sector. Too bad that this someone obviously not very competent in the field of air transport regulation has never come to terms with the European rules on the subject of Air Operator License and market rules, and therefore after four years of absolute folly in extraordinary administration , we found ourselves with a newborn Newco, born dead and who is going to run aground in the 108 more than correct findings made by the European Commission to a document that objectively cannot even remotely define an industrial plan of any airline as it is totally lacking in the fundamental principles that characterize an airline business plan.

Now I believe that every Italian citizen, who has been committed for years to compensate for Alitalia's huge losses, naturally wonders: in this tragic scenario, what could the newly installed government do about Alitalia?

In the meantime, a premise must be made: today the country has an absolute genius at the head of the government, a monster of skills and endowed with an industrial economic acumen perhaps unique in the entire planet. A few days ago Lupo Rattazzi, an enlightened and cultured entrepreneur like few others, gave me a tribute to a document that is not exaggerated even a little to define a masterpiece of macroeconomic treatment. This document is none other than the thesis of Mario Draghi's PhD at MIT in Boston. A composition of rare intuitions where already in 1976 through complex functions and the use of natural numbers a young Draghi theorized the economic framework that would characterize the last thirty years of the last century by reshaping the Keynesian concepts aimed at expanding the monetary base through a series of analyzes on the structures of economic and financial dumping that highlight the values of debt intended as an instrument of growth and not of social welfare and empirically demonstrating the collateral effect of the money borrowed for expansionary purposes on the market balance between supply and demand. A work that even today, in the macroeconomic reality strongly conditioned by the effects of the pandemic, would be absolutely precious and full of insights to be pursued even in the reality of Italian air transport, now devastated by unfortunate system policies. Just think of what has been done in recent months in the field of air transport, we are faced with a series of approved decrees that appear to be impracticable as conceived because, through an absurd generalization of the system in trying to give subsidies to rain. to subjects that the European Commission deems undeserving because already in crisis well before Covid or because perhaps already beneficiaries of subsidies through the parent company, in reality virtuous airlines like Neos are hit, it is really deserving of subsidy and instead mired in the maze of unworkable decrees .

Returning to Alitalia, realistically there are two roads, the first is to close the provisional year and then decree "the failure of bankruptcy" with the consequent total loss of the over 1.5 billion euros that Italian taxpayers have given to Alitalia in the 4 years of extraordinary administration. Then there is a second possible option and that would be to start doing things seriously with a far-sighted strategy aimed at recovering taxpayers' money and guaranteeing a future for the workers of the company and its related industries. With this in mind, it is first of all necessary to act on the decree, i.e. to modify the two years of supervision granted to the extraordinary administration after the disposal of the assets and convert them into a further two years of extraordinary management, thus giving Alitalia the possibility to take advantage of two years of restructuring or of that work of rationalization and efficiency of internal processes and of complete revision of the value chain that in these 4 years has not even remotely pursued, indeed to be honest it has never begun. Only in this way and in no other way can Alitalia's assets be valued and, a step that cannot be avoided, re-merged into a newco established within the scope of the extraordinary administration. At that point, the tender can and must be carried out to sell a company that has become efficient and effective and with an extraordinary brand to the highest bidder according to the rules of Italian bankruptcy law and market rules.

Last question would concern the problem of finding more money to refinance the Extraordinary Administration, which is now almost completely short of money.

If managed and spent well it would take around 250 million. After that Alitalia in AS has at least 800 million inside to recover to manage its relaunch, create an efficient newco and sell it to satisfy the state credit and perhaps also a part of the credits of the other creditors. It is certainly a difficult undertaking, but not impossible. Just find someone who knows where to put their hands and how the airline business works and how it works. In a nutshell, it would only take Alitalia to be managed by a manager who, as one of my great teachers said, should "smell" a lot of kerosene, or a manager that Alitalia has never had the good fortune to have and who is in aviation an unavoidable figure. Maybe "SuperMario" will succeed in this miracle together with the new tenant of the Mise, Giorgietti . The latter of Bocconi origin should still remember today the great lesson of Prof. Vittorio Coda on the importance of a corporate strategy consistent with the business model of a company.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/che-cosa-possono-fare-draghi-e-giorgetti-su-alitalia/ on Sun, 14 Feb 2021 10:13:34 +0000.