Italy’s national airline Alitalia banking on a turnaround

Alitalia chair Luca Cordero di Montezemolo says the airline is on track to turn around and make a profit next year.

Alitalia chief Cramer Ball, chairman Luca Cordero di Montezemolo and deputy chairman James Hogan.

One of Italy’s most celebrated businessmen and the man who resurrected the Ferrari brand on the global stage says there is still “big room for improvement’’ at his latest pet project, turning around Italy’s national airline Alitalia, after a dramatic recovery in its fortunes over the past year.

Last night Alitalia — which is now 49 per cent-owned by the Abu Dhabi-based Etihad Airways — launched a new staff uniform and revealed its first major global advertising campaign for seven years. The airline last month revealed that losses were down by €381 million ($590m) last year, and that it was on track with its plan to be profitable by the end of next year.

The new ad campaign features the photography of Pierpaolo Ferrari, one of Italy’s top fashion ­photographers, while the new uniforms were designed by Milan-based haute couturier Ettore Bilotta.

“I don’t want to look too optimistic. But it is important to consider where we started. We are in line with the project, in line with the historic goal to achieve a profit in 2017,” Alitalia chairman Luca Cordero di Montezemolo told The Australian at the airline’s offices at Leonardo da Vinci Airport at ­Fiumicino outside Rome.

“For the passion we have for this business you would think we have achieved our goal. There is still big room for improvement. But if I think that in August 2014 Alitalia was not even in a condition to buy fuel compared to where Alitalia is today, I think we have to be proud and pleased.

“But we need to keep our feet on the ground. And there is much work to do.”

Mr di Montezemolo was chief executive and then chairman of Ferrari from 1991 until late 2014 and steered the sports carmaker through a revival on the Formula One racetrack and in its road car operations.

In 2014, Etihad bought a 49 per cent stake in the financially troubled Alitalia as part of a €1.76 billion rescue deal. The majority 51 per cent stake was retained by Italian company CAI. Mr di Montezemolo was appointed Alitalia chairman in November that year.

Last December, Cramer Ball, the former Australian head of Etihad affiliates Jet Airways and Air Seychelles, was appointed the new chief executive of Alitalia. Etihad chief executive James Hogan is the Italian carrier’s deputy chairman.

“After 17 years we have a CEO coming from the (aviation) business,” Mr di Montezemolo said.

“All of the previous Alitalia CEOs were Italians, coming from different businesses.”

In his first public comments since taking up his role eight weeks ago, Mr Ball said there would be no wavering in Alitalia’s commitment to be profitable by 2017 after losing almost €200m last year.

Alitalia has not reported a full-year profit since 2002.

Its new strategy focuses on ­operating more long-haul routes, especially to fast-growing Asian countries including China, buying new and more efficient planes, upgrading technology and making use of the international network of Etihad.

Alitalia will invest a further €400m across its fleet in 2016.

“Failure is not an option,” said Mr Ball, who has an Italian wife.

“I believe this is one of the best jobs in aviation. You look at the history and what Alitalia means to the country.

“I can’t think of many other airlines around the world that you would want to work for.

“I like a challenge. I believe we have the fundamentals and you look at the work that has been done over the past 12 months. It has come a long way. There is a huge opportunity — an iconic brand, great people, and Italy as a destination.”

Mr Hogan said the appointment of Mr Ball, which followed the abrupt departure of former ­Alitalia chief Silvano Cassano last September after less than a year in the job, was “a bit like an interchange player in Aussie rules”.

“The previous chap left ... Luca took over, we have stayed on path and Cramer has stepped in and continued the momentum. It is a good interchange, he has stepped in and gone into the third quarter,” Mr Hogan said.

“The real challenge for Cramer is how we bring the Italian character, style and flavour alive because that is going to change the revenue mix, the seat factor and that is going to strengthen Alitalia in its own right. We now need to accelerate the revenue.

“And the acceptance from the Italian people that Alitalia is back in business too ... We need to get the market back — the market research showed when we bought into the business that Italians supported Alitalia but Alitalia didn’t respect Italians. Italy is a package, as a consumer and a visitor there is so much to offer.”

Alitalia has had a long affinity with Australia’s large Italian community and in April the Italian carrier struck a new codesharing agreement with Virgin Australia, in which Etihad is also a cornerstone shareholder.

The deal, which secured regulatory approval this week, covers Alitalia’s daily flights from Abu Dhabi to Rome and Milan. Until March, Alitalia had a legacy codeshare and frequent-flyer agreement with Virgin rival Qantas.

While there are no plans for ­Alitalia to resume direct flights to Australia, Mr Ball is keen to work with Virgin chief executive John Borghetti to capitalise on the strong demand for travel options to Italy and change the historic perceptions of the Italian carrier in Australia.

Damon Kitney travelled to Rome courtesy of Etihad Airways.