Italy’s flagship airline, Alitalia, has formally requested to enter bankruptcy proceedings.
After workers rejected a restructuring plan, the airline will enter a procedure that will either lead to its sale or liquidation.
Etihad (TADAWUL:7020), the airline that owns 49 percent of Alitalia, and Italian shareholders have been “committed to recapitalise and finance the plan with 2bn euros”, Alitalia said in a statement. However, this cannot go through without the approval of the employees, who rejected the plan in a vote last month.
The airline is currently losing approximately 1 million euros (£844,840) every day. Without government support, Alitalia risks running out of money by mid-May.
Alitalia workers are not alone in this decision. An opinion poll published on Friday suggested that 77 percent of Italians believe the airline should be left to fail.
James Hogan, the CEO of Etihad Airways, said the Italian airline required “fundamental and far-reaching restructuring to survive and grow in future.”
“Without the support of all stakeholders for that restructuring, we are not prepared to continue to invest,” he said in a statement.
Alitalia’s board said that due to “the serious economic and financial situation of the company, of the unavailability of the shareholders to refinance, and of the impossibility to find in a short period of time an alternative”, they will proceed with the filing for extraordinary administration.
Rival airlines Norwegian Air (STO:NASO) and Lufthansa have shown little interest in buying the collapsing airline.
The airline has received over 7 billion euros (£5.9 billion) from the Italian government over the past ten years.
Alitalia has received a 400 million-euro bridging loan from Rome to allow it to keep operating during the bankruptcy process.
The Italian prime minister has promised to come up with a plan to keep the airline afloat by the middle of the month.