Italian Government Re-Nationalizes Bankrupt Alitalia

After the sales process for Italy’s struggling former flag carrier Alitalia yielded no buyers, the Italian government has decided to re-nationalize Alitalia, the bankrupt Italian carrier.

The confirmation of the takeover speculation followed reports that the government would pump as much as €600 million into the bankrupt airline over the next year.

The Italian Economic Development Ministry didn’t immediately respond to a request for comment on the news. The latest deadline for potential buyers to bid on the airline is March 18.  Of course, Italy must rely on EU rules relaxing state aid to gain approval after no buyers were found over several years in bankruptcy.

Lufthansa and Delta Air Lines, which had both considered offers in the past, are now seeking government aid to weather coronavirus crisis themselves, and most other airlines are barely hanging on amid the biggest unanticipated exogenous shock to their business in decades.

While the government should hopefully get a ‘good price’ on the bankrupt carrier since no buyers were found, it will need to rely on the EU excusing some rules about government aid to private companies.

To that end, one Twitter user in Italy summed up the faults inherent in the Italian government’s decision: It’s tantamount to throwing more good money after bad, at a time when that money could be put toward a more productive purpose.