Alitalia case as a minor actor in a major European airline industry shakeout

Implications: After the collapse of the Alitalia's sale process, with the last one of original 10 bidders having abandoned the game, it's now time for tough choices for the Italian Government. The past months showed that there is really little financial interest on the international market for Alitalia, most definitely as the Italian airline faces strong structural inefficinces due to union powers, mismanagement and an obsolete fleet asset. Although the Italian carrier has still some liquidity into pockets, cash will be burst as on December next. The most likely solution will be a direct negotiation by the Italian Government, which still owns 49.9% of Alitalia, with some players like Air France, Lufthansa, TPG or Air One. As Air France is currently implementing a bid for Spain's Iberia, Lufthansa may surprisingly bid the first one to be contacted, most definitely as the German carrier has proved effective in managing a multi-hubbing strategy with its Frankfurt, Munich and Zurich hubs.

Analysis: The Alitalia case and the possible takeover by Lufthansa or Air France may be only a minor step into a broader consolidation process taking place in the European landscape, that could involve in the short-term also Austrian Airlines, Iberia, SAS and on the low-cost side Air Berlin and SkyEurope as well.