Alitalia is a very different and more attractive investment proposition to the one Air France-KLM and others snubbed in recent years when Alitalia couldn't service its borrowings. The Italian government is taking on most of the €1.2 billion in accumulated net debt. The final amount is yet to be decided.
Meanwhile, Alitalia has emerged as a bigger and potentially much more efficient business thanks to its merger with profitable, no-frills rival Air One. Thousands of jobs have been cut and new more flexible contracts agreed with labor unions. Plus Alitalia now operates a fleet of younger, more economical aircraft. The government has taken on older aircraft that it's selling off.
The Alitalia-Air One combination should have pricing power in the Italian market, Europe's fourth largest for business travel, where it has a 55% share compared with the old Alitalia's diminished share of 30%. The new company has a monopoly on the lucrative Milan-Rome route.
