Air Transport World

Alitalia seeking larger market share. (air lines)

Rome--Alitalia Chairman Umberto Nordio is feeling better about his airline these days. When things are going badly at Alitalia, whether it be the troublesome strikes that have plagued the airline from year to year, a slumping economy, or sword rattling from across the Atlantic about open skies and such, it shows on the 64-year old Presidente. But when things are going well, the suave, erudite chairman is more relaxed and easier to talk with. Nordio is easier to talk with now.

Part of the reason for Nordio's good humor was the excellent report he was able to issue about Alitalia's performance in 1983. The airline, like many of its European counterparts, enjoyed the fruits of learning how to make money in a zero growth industry. Alitalia did just that in 1983. For the first time in the 1980s Alitalia produced an operating profit, an impressive $61.4 million for its 1983 financial year ended December 31. That is right up there with SAS and KLM, more than Lufthansa. In 1982 the airline suffered a $30.8 million operating loss. Increased yields

Alitalia's impressive turnaround of nearly $100 million was accomplished on virtually no traffic growth. The airline had only a 3% increase in total tonne-kilometers produced, and much of the growth was in freight which increased 7.8%. Passenger boardings were up only 1.5% to 7,369,843 in 1983 while there was no increase in RPKs which held at 12.6 billion for 1983.

There were many factors in the impressive financial turnaround, but the most important was Alitalia's ability to increase yields. Passenger revenue, for example, increased 17.6% in 1983. By our calculations Alitalia was able to increase its system passenger yields from 11.2^ per mile in 1982 to 12.9^ per mile last year. Much of this was due to a tightening of discount fares on international sectors. But Alitalia even got a break at home as the Italian government allowed a 10% fare increase in March and another 7% in June.

In addition to the improved yields, Alitalia's ability to restrain costs helped improve the 1983 financial picture. Expenses went up only 10.1% over 1982. Part of the good fortune was caused by a decline in fuel prices, similar to that enjoyed in the United States, but not quite as good.

One of the major problems facing Alitalia last year was the decline of the lira, especially in relation to the U. …

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