In the first quarter of 2012, the Alitalia Group increased its revenues (+13%), load factor (+5 points) and market share in Italy (+0.6 points) despite a weak demand

Historically, air transportation demand has always reflected GDP performance in the reference markets to an even higher degree. In the quarter considered, the negative GDP performance in Italy, the Alitalia Group’s home market, caused a fall in demand in terms of volumes (passenger numbers) and value (yield quality).



In the first quarter, Assaeroporti (Italian Airports Association) reported 21.4 million transported passengers in Italy, 300,000 less than the same period of 2011, showing an average decrease of 100,000 passengers each month. 



Compared to Q1 2011, the quarter was also affected by a sharp 15% increase in fuel price (which price accounts for approximately 30% of airlines’ operating costs) as well as by a 3% stronger dollar. 



The Alitalia Group industrial and commercial performance 



In the quarter under review, the number of passengers transported by the scheduled flights of the Alitalia Group was equal to 4.8 million, i.e. unchanged from the first quarter 2011. 



As the overall number of passengers transiting in Italian airports was down, the Alitalia Group market share increased from 22.9 to 23.5% (+0.6 p.p.) in aggregate in the three market segments, i.e. intercontinental, international and domestic. 



Through the changes in offered capacity, which were also made possible by the different aircraft mix in the fleet, the load factor for the period significantly improved from 64 to 69%, i.e. a 5-point increase against an average load factor increase for AEA airlines of 2.6 points. 



Total revenues for the period significantly improved from 684 to 776 million €, i.e. up 13%, as a result of, inter alia, the development of long haul charter operations, an increase in ancillary revenues, and an improvement in the Cargo Belly operations (which recorded a 12% revenue increase and a 6 p.p. load factor improvement). 



Financial performance 



Stable transported passenger volumes, a load factor increase and a rise in revenues helped absorb – to a large extent – the negative impacts of the scenario described above. 



The performance of results, i.e. EBIT and net result, was negative for the Alitalia Group although to a lower extent as opposed to the performance of the main European competitors. 



The Airline operating result (EBIT) was equal to -109 ml. €, or 23 million € less than the level recorded in Q1 2011, whereas its net result was equal to -131 ml. €, or down 43 million € from the same period of 2011, which also reflected the negative impact of the euro/dollar exchange rate on the asset exposure denominated in foreign currency. 



Net financial indebtedness at 31 March was equal to 962 million €, with a share of owned aircraft indebtedness equal to 686 million €. 



At the end of the quarter, total liquidity – including unused credit facilities – amounted to 318 million €.  Operational performance 



In terms of operational performance, the January-March period saw excellent KPIs with special regard to service reliability and quality. 



Punctuality of flights on arrival was at 88.3%, despite the snowfall that affected the Rome Fiumicino Hub in February, whereas flight regularity was equal to 99%. 



Fleet development 



The Group fleet renewal process continued in the quarter considered with the entry of 3 new Embraer E-Jets. In addition, the process of cabin reconfiguration started for the 10 long-haul Boeing B777s and will be completed by July with 3 new travel classes for intercontinental flights: Magnifica, with full-flat seats, Classica plus, Alitalia’s premium economy, and Classica with new ergonomic seats. 



By the end of the year, another 20 new aircraft will be phased in, specifically Airbus A330s, Airbus A319s and Embraer E-Jets; concurrently, the old MD80s will be fully phased out. 





Alitalia’s President Roberto Colaninno declared: “Although we are going through an exceptionally hard period for the industry and the Italian economy as a whole, Alitalia is continuing to invest. Fleet renewal, network extension and the development of new industrial and commercial agreements all reflect our resolve and commitment to grow as a key infrastructure asset for Italy’”. 



Alitalia’s CEO Andrea Ragnetti declared: “The first quarter closed with a worse result in comparison with Q1 2011. However the Airline reacted promptly to limit the negative impact of the economic cycle through a qualitatively satisfactory operational management and, more importantly, the optimisation of its offered capacity. Operational excellence will be crucial in view of the very difficult prospects for the next 9 months, with no signs of improvement in European economy and an extremely tense situation with regard to fuel prices and the euro-dollar exchange rate”. 

Source: Alitalia