Alitalia loses $92.5 million in 2011

Alitalia (2nd) has approved and issued its financial results for 2011. The company had a net loss of $92.5 million (69 million Euros).

The company issued the following statement:

“The Board of Directors of Alitalia – Compagnia Aerea Italiana S.p.A. met in Rome on February 24, chaired by Roberto Colaninno, and approved the Group financial statement for 2011 as presented by the CEO Rocco Sabelli.

In the financial year ending December 31, 2011, the Alitalia Group recorded revenues worth euro 3.478 million (+7.9%) and 25 million* transported passengers (+5.5%). Load factor grew 0.8 points to 72.8%*.

Operating result (EBIT) was equal to -euro 6 million, up euro 100 million from 2010, with a margin of -0.17% on revenues, in line with the operating breakeven objective.

Net result, after provisions and extraordinary costs, was equal to -euro 69 million, up euro 99 million from 2010.

Passenger revenues from international and intercontinental flights rose 7.2%, to 62% of total passenger revenues.

Growth – recorded in passengers, revenues, EBIT and net result – was achieved in a period marked by:

  • an oil price rise ($110 per barrel in 2011 against $83 per barrel in 2010), which resulted in higher operational costs by Alitalia (euro 266 million);
  • natural disasters and crises occurring in two key markets for Alitalia – Japan and North Africa – which resulted in a sharp fall in demand from those regions;
  • and the economic and financial slump, which caused a significant decrease in high-yield demand from the corporate segment starting from the fourth quarter.

Such effects were successfully mitigated through:

  • efficient management of offered capacity – flexibility in scheduling, the development of long-haul charter flights in the winter months, network design and fleet utilization, – which marked an increase of load factor higher than the demand trend. Among the 10 largest carriers of the AEA, the European Airlines Associations, Alitalia recorded the best load factor improvement in 2011;
  • the implementation of policies and processes aimed at optimizing spending and cost cutting;
  • and the development of ancillary revenues, co-marketing initiatives and agreements with industrial and commercial partners.

As of December 31, the company’s financial position was characterized by net financial debt equal to euro 854 million, mainly due to the amount owed on the company-owned aircraft fleet (euro 675 million vs. euro 774 million in 2010). Taking the net amount of debt recorded in December 31, 2010 into account, the total amount due to the Alitalia LAI’s Receivership Procedure (the former Alitalia) is euro 115 million. The 2011 net amount of debt has increased by euro 54 million, mainly due to the change of working capital.

Total liquidity, as of December 31 2001, amounted to euro 326 million  (vs. euro 412 million in 2010).

Over the year, the Alitalia fleet saw the entry of 13 new aircraft (against the phasing out of 12 old aircraft) of which three were wide-body aircraft. As of December 31, the operating fleet was made up by 152 aircraft (among the youngest in Europe with an average lifetime of 8.3 years). From 2009 to 2011, a total of 34 aircraft were phased in, nearly one per month, and 26 were phased out.

For 2012, the fleet renewal plan will be marked by speedier deliveries of long-haul and short-to-medium-haul aircraft, with at least 20 new entrants, of which 5 are Airbus A330s for intercontinental routes. By the end of the year, cabins of the 10 long-haul Boeing B777s will be totally renewed (in accordance with the three travel classes Magnifica, Classica Plus and Classica), while 16 old aircraft will be phased out.

Operations of the “Smart Carrier” Air One (which began in April 2010) rose 25% in terms of transported passengers in 2011 (like-for-like comparison in the April–December period) with passenger numbers rising to 1.4 million through activity growth in Malpensa and the opening of a new base in Pisa.

By its Cargo Belly service, Alitalia transported more than 58,800 metric tons of goods, in line with the 2010 volumes and revenues grew 15% partly through increased long haul operations.

In 2011, significant progress was achieved in the quality of service, continuing from the improvements in 2010. Flight punctuality on arrival reached 85.5%, or 5.5 points above the 2010 level and 3.6 points above the AEA average.

Alitalia also gained notable international awards and acclaim this year, as the best airline in the world for the quality of in-flight cuisine (according to Global Traveler’s GT Reader Tested Survey of 36,000 frequent flyers), and as one of the top five world airlines for the punctuality of its flights, including those operated by subsidiaries and code-share flights (Flightstats On-time Performance Service Awards 2011).

Prospects of the air transport sector for 2012 remain a challenge. In accordance with the Airline Business Confidence Index of January 2012 produced by IATA (the International Air Transport Association), the industry is likely to undergo a further decline of profits in 2012 mainly due to a slowdown in volumes growth, a fall in high-yield demand and higher fuel costs. The Eurozone is particularly exposed to such factors as a consequence of the forecasted GDP fall in the area.

The Executive Committee meeting of Alitalia, likewise held on today’s date, approved:

  • a new design of the Milan – London service (more flights to London City Airport targeting business travelers, and a new service between Milan Malpensa and London Gatwick operated by Air One);
  • an enforcement of loyalty programs;
  • multi-year agreements with leading providers of aircraft and engine maintenance;
  • and the confirmation of a new service between Rome and Bengasi (Lybia), following the positive results of the services to Tripoli, which Alitalia re-opened in November 2011 as the first among EU carriers.”

Copyright Photo: Reinhard Zinabold.

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