MIDYEAR REPORT 2012
CEO ANDREA RAGNETTI SAYS: "THE WORST IS OVER, WE ARE
TARGETING A TREND REVERSAL IN THE SECOND HALF OF THE YEAR".
IN A VERY DIFFICULT MARKET SITUATION, THE ALITALIA GROUP HAS
RETAINED ITS MARKET SHARE AND INCREASED REVENUES TO 1,686
MILLION EUROS (+ 4.1%) AND LOAD FACTOR TO 71.1% (+ 3.4
EBIT (- 169 M EUROS) AND NET RESULT (- 201 M EUROS) REFLECT
THE MARKED WORSENING OF THE MACROECONOMIC SITUATION, THE
INCREASED FUEL COST AND A STRONGER DOLLAR AGAINST THE EURO.
INVESTMENTS IN THE FLEET RENEWAL PROCESS ARE CONTINUING.
OPERATIONAL PERFORMANCE IS STILL IMPROVING: ALITALIA'S FLIGHT
PUNCTUALITY AND REGULARITY INDICATORS NOW RANK AMONG THOSE OF
THE WORLD'S TOP PERFORMERS.
Rome, 25 July 2012- The Board of Directors of Alitalia
- Compagnia Aerea Italiana S.p.A. met today in Rome - with
Mr. Roberto Colaninno in the chair - to approve, inter
alia, the Group's consolidated midyear financial
accounts after a thorough illustration by the CEO Andrea
In the view of Alitalia's Board Chairman, Mr. Roberto
Colaninno, "despite an exceptionally challenging
macroeconomic scenario, revenue growth will remain a mission
for our Group in the next few years. That is why we will
continue to invest in service fundamentals and fleet quality.
A strong and solid national airline has a value going well
beyond national pride and proves now to be a strategic
economic asset for Italy as a whole".
"THE WORST IS OVER AND WE ARE CONCENTRATING ON GROWTH"
"In one of the worst half years in the memory of air traffic
insiders, Alitalia has managed to resist - better than other
European airlines did - to the most diversified adverse
events, i.e. oil cost at its highest historical levels, an
unprecedented appreciation of the dollar against the euro,
recession in Europe and - to an even higher extent - in
Italy, which all caused a dramatic shrinkage in demand"
declared Andrea Ragnetti, Alitalia's Chief Executive Officer.
"In the latest quarter we worked hard to counter the crisis
and prepare ourselves to speed up the pace of our revenue
growth in the second half of 2012 and chiefly in 2013. We
have continued to renew our fleet for it to be among the
youngest in the world by January
2013; we have concentrated on a further improvement in
service and operational performance with the ultimate aim of
achieving the best on-time record in Europe by 2014; we have
shaped our internal organisation with the objective of
driving up sales and revenues. The worst part of the year is
back. The second half will expectedly perform better the
first. Many sacrifices will still be needed and our action
will have to be cohesive and resolute; in any case, the trend
reversal I expect will set us on a course towards 2013 which,
as I said, is likely to bring Alitalia back to operating
profit after more than twenty years".
THE SECTOR SCENARIO
The early six months of 2012 were characterised by a
financial crisis that beset the Euro
THE ALITALIA GROUP COMMERCIAL AND INDUSTRIAL PERFORMANCE
zone and, in particular, the Mediterranean basin countries,
an area whose recession is proving to be deeper and longer
The half year also saw a significant increase in the cost of
fuel supplies (whose incidence on the Airline's operating
cost was 33% on average). This increase determined a
period-on- period price increase of 7.4% over 2011 (up from
an average oil cost of 107.6 dollars per barrel in H1 2011 to
115.1 dollars per barrels in H1 2012, with peaks of 124.5
dollars per barrel).
Another factor that negatively impacted on the Airline's
results is the 6% strengthening of the dollar against the
euro (as opposed to the first half of 2011), which negatively
affected not merely fuel purchases but also other costs such
as lease fees on non-owned fleet and maintenance
In the half-year ended on 30 June 2012, the Alitalia Group
transported more than 11 million passengers, with a
substantially unchanged result as opposed to the January-June
2011 period (-0.8%). In a general context of market-capacity
rationalisation and in order to face a falling demand caused
by the economic and financial crisis, the Alitalia Group
FINANCIAL POSITION AND PERFORMANCE
capacity optimisation actions which resulted in an overall
3.7% reduction in offered capacity.
Alitalia's entrance into the market of long-haul charter
flights to tourist destinations in particularly high demand
from Italian consumers during winter resulted in the
Airline's increase of its transported passenger volume by 195
thousand units, to be considered in addition to the more than
11 million passengers transported through scheduled
In the January-May period, the Alitalia Group market share
was equal to 22.7% (in line with the level of the early 6
months of 2011) on the three flight segments in aggregate,
i.e. intercontinental, international and domestic.
Through the introduced changes on offered capacity - made
possible, inter alia, by the Airline's fleet renewal - load
factor achieved 71.1%, i.e. significantly above the 2011
level (+3.4 percentage points).
Total revenues for the period rose significantly from 1,620
to 1,686 million euros (+4.1%).
The driving factors behind this result include, e.g., the
development of long-haul charter operations, a strong
increase in ancillary revenues, an improvement in Cargo Belly
operations (whose revenues increased 6.2%), a load factor
rise (+ 5 percentage points), fare adjustments to reflect
increased fuel costs - in line with the Airline's reference
competitors - and a more efficient fare-class management.
Despite the demand shrinkage, the Alitalia Group inaugurated
new routes during the period, in particular through the
start-up of Air One Smart Carrier operations in Venice - the
new third base of Airline's network - and introduced new
domestic and international flights from Milan Malpensa and
In the first half of the year, Alitalia continued to invest
in quality improvements in ground and on-board passenger
services through the launch of a new Executive service for
high-value customers - including an exclusive package of
dedicated pre-flight and after-flight benefits. This is
indeed a flagship service in Alitalia's offer for the most
demanding clientele and an ideal companion to a travel
experience in Magnifica, the intercontinental business
Magnifica is today a unique, top-raking class of its kind
globally, where passengers find last- generation full-flat
seats which convert to comfortable beds, in-flight meals
fully inspired by typical regional recipes (through which
Alitalia won the "Best Airline Cuisine" award of the US
monthly Global Traveler for two years in a row), accessories
in leading Italian designers' brands such as Richard Ginori
and Frette and a Bulgari case with an exclusive Airline
selection of cosmetics and products.
Through a gradual renewal of the long-haul fleet, the
"Classica Plus" - a premium economy introduced by Alitalia on
its intercontinental routes - is now available on flights
from and to Japan, Argentina, Brazil and Venezuela.
Italy's economic and financial situation and the impact of
negative scenario factors as outlined above drove down the
Alitalia Group's financial performance indicators, i.e.
and net result.
At -169 M , EBIT was 101 million euros below the level of
the first half of 2011, whereas net result closed at -201 ml.
, down 107 million euros from H1 2011.
On 30 June, net financial indebtedness was equal to 862
million euros, up 8 M from 31
Dec. 2011 (854 M ), with a 658 M indebtedness share of the
Midyear total liquidity - including unused credit lines -
amounted to 367 M , increasing 41
M over the level at 31 Dec. 2011 (326 M ).
In terms of operational performance, in the January-June
period, the KPIs for service quality and reliability retained
FLEET RENEWAL AND FUEL MANAGEMENT POLICIES
On-arrival punctuality was 88.9%, up 0.9 percentage points
vs. the same period of 2011. On the Rome-Milan route,
Alitalia recorded a punctuality rate of 93.9% for flights on
arrival (+0.2 percentage points vs. the same period of
Today Alitalia is among the top-ranking airlines in the word
for flight punctuality, with a rate well above the average of
the AEA (Association of European Airlines) member airlines
(82.5% is the measured AEA average punctuality on
In 2009, the average punctuality of Alitalia flights was
73.7%, which placed Alitalia only at no.
23 among all European carriers. Over the last three years,
unswerving efforts were made in operations to achieve this
result which, however, can still be improved. This is the
rationale behind Alitalia' implementation, as a pioneer
worldwide, of a new integrated information system named CAMS
(Connection Analysis Management System) easing the management
of transits at the Rome Fiumicino hub. By integrating 7
different operating systems and making them able to
intercommunicate, CAMS handles information in real time and
improves the efficiency of handing and support operations on
passenger boarding and disembarkation, and luggage loading
In the half year under review, the flight regularity
indicator was at 99.5%, down 0.3 percentage points due to the
exceptional snowfall having affected the Rome Fiumicino hub
and many airports in central and northern Italy in February.
Net of the effects of these exceptional events, the
regularity indicator would have otherwise reached 99.9% of
flights, or plus 0.1 percentage points against the first half
The rate of mishandled luggage claims also improved, with
92.3% of claims closed positively
(luggage found and delivered to customer) within 48 hours as
opposed to 87.7% in 2011.
In the context of the Customer Care Management strategy (one
of the key priority projects for the Airline with an
increasingly high focus on customers' needs and quality of
service), an important project was initiated in June for a
more efficient and innovative customer care service. Alitalia
is among the first-ranking airlines in the world to provide
its crews with a Motorola XOOM2 tablet device containing all
information on high-value customers, for their immediate
recognition by cabin attendants and service customisation in
accordance with their requirements - thus improving in-flight
In the early 6 months of 2012, the Group's fleet renewal
process continued with the phase-in of 14 new aircraft
including long-haul Airbus A330s and short-to-medium haul
ALITALIA'S STRATEGIC OBJECTIVES AND OUTLOOK FOR THE NEXT FEW
MONTHS Since 2009 Alitalia has chiefly focused on
rebuilding its operational efficiency, quality of service and
a competitive cost position, as key requirements given the
permanently critical macroeconomic scenario.
and Embraer E-190s and E-175s. As on 30 June, Alitalia's
operating fleet included 154 aircraft.
Cabin reconfiguration in 10 long-haul Boeing B777s into the 3
new travel classes for intercontinental flights (Magnifica,
Classica Plus and Classica) ended on 30 June, 10 days in
advance of the deadline fixed at the project start.
Alitalia's fleet renewal process will continue throughout the
year with the phase-in of another
10 aircraft including Airbus A330s, Airbus A319s and Embraer
E-175s, bringing the total figure of fully new aircraft to 59
at the end of 2012. By the end of this year, the phase-out of
the old MD80s will also be completed.
By 1 Jan. 2013, Alitalia will have a fully new or renewed
fleet, among the youngest (6.5 years of average lifetime) and
the most efficient in the world (through a reduced number of
aircraft families) with an added plus, i.e. a low impact on
To cope with the increasing oil cost (cost item number one in
the Airline's accounts), similarly to the majority of
airlines, one year ago Alitalia started to implement a
package of fuel-saving practices and was also one of the few
world carriers to invest in a Fuel Management incentive
scheme involving more than 2 thousand employees of the
operational areas. Through the high professional profile of
Alitalia's pilots, this new policy places the Airline among
the best performers and is intended to reward the virtuous
behaviours and practices adopted by its staff in order to
optimise fuel consumptions by reducing waste and increasing
savings whenever possible, without overlooking that the
Airline's main objective is flight safety.
The strategic objective for the next 3 years is to speed up
revenue growth by the development of a commercial policy
enabling the Airline to generate resources for the benefit of
the Group's operating results and investments in further
The outlook for the second half of the year is one of
cautious optimism. Through a natural improvement of
seasonality, the cost-containment measures already
implemented and those to be introduced in the months to come,
the second half of
2012 will expectedly exhibit an appreciably better operating
result than the first.
- 0.8 %
+ 3.4 p.p.
Revenues in M
+ 4.1 %
Operating Result (EBIT) in M
Net Result in M
Full A15 network punctuality
+ 0.9 p.p.
For press communication: Antonella Zivillica
Alitalia Media Relations Manager
Tel. no. 06-65638950 - Mobile no. 335-1449843
Email: [email protected]