In what was basically a poorly kept secret until just a few days ago when Carsten Spohr suggested that Lufthansa would be interested in Alitalia, Lufthansa today confirmed it has submitted its proposal.

In it, Lufthansa is offering upwards of 500mm Euro to buy  Alitalia out of bankruptcy.   The 500mm offer is asking for all of Alitalia’s aircraft, employees and airport slots around the world.   However, LH said it would have to let 6,000 of the 12,000 Alitalia employees go should it be successful in acquiring the Italian national carrier.

Will it happen?   Most likely not.

Though at first blush the LH offer is compelling and agrees to take on all of Altalia which is something that the Italians want to happen vs. Alitalia being blown up into bits and acquired by multiple suitors, it is expected that the group handling the administration of Alitalia will decline the bid.   That has been made obvious by the fact that a November 5, 2017 deadline set by Rome to find a suitor for Alitalia has been extended to April 30, 2018.   This extension does not inspire confidence that Lufthansa’s bid is being taken seriously.

I believe the proposal will fall on deaf ears in Rome since it suggests that 6000 Alitalia employees will lose their jobs, and with the Italian Gov’t in control of the sale such a deal would be bad politics considering that Italy itself is in a state of flux with its ruling parties and can ill afford to upset their constituency.  The proposal also suggests that short and medium haul routes would be gutted from the timetable.

Speaking of politics, there is no love loss whatsoever between Rome and Berlin thanks to the EU’s (primarily Germany) handling of most things on the continent.   The migrant crisis is front and center in Rome and Italy feels it is being asked (unfairly) to bear the burden of Merkel & Company’s failed experiment, but I digress.   So it would most likely pain Italy and Italians to see Germany of all countries (or an agent of it) come in to try and rescue Alitalia.   As the say goes, “thanks but no thanks”.   Italians are a prideful people and this just doesn’t seem like something they will sign off on.

In addition to the Lufthansa offer, EasyJet has also submitted a bid demonstrating its interest.  However their bid is asking for only parts of Alitalia and as I mentioned earlier, Rome wants this to be an ‘all or none’ deal.   There are also 3 to 4 private equity firms that have expressed interest in Alitalia but their details have not been made very obvious as yet.

While the process of finding a buyer continues, Rome has agreed to throw good money after bad and has announced that it has given Alitalia another 300mm Euro to continue operations.   This after the Italian government floated Alitalia a 600mm Euro loan earlier this year to help finance the debacle.   I’m sure that Italians are pleased that they’ve spent nearly 1 Billion Euro just this year alone to keep the birds in the air.

Apparently there’s no end in sight to this soap opera…..