Delta Taking Part Ownership of Alitalia is “Certainty” While Italy’s Government Will Kick in More Subsidies

Delta Air Lines moved billions in pension obligations off its books and onto the federal Pension Benefit Guaranty Corporation in bankruptcy, yet retained tax loss carry forwards so that it wouldn’t have to pay taxes when it started earning profits.

Delta owns a stake in China Eastern which is the most subsidized Chinese airline. They have a lock on using government-owned slots and gates at New York LaGuardia and JFK as well as other airports and protection from foreign competition on U.S. domestic routes.

Delta’s mantra has always been subsidies for me but not for thee. So they’re willing to start a trade war with Europe because they don’t want Air Italy, 49% owned by Qatar Airways, to be able to fly to the U.S. They publicly claim Italy’s second carrier, which has 15 planes and flies 4 U.S. routes (two of which aren’t even flown by U.S. airlines), is an existential threat to U.S. jobs — while they have only Airbus planes on order.

American Airlines once again plays the greater fool going along with Delta in their attack on Air Italy.

Delta also happens to benefit by hamstringing Italy’s number two airline because they have anti-trust immunity to collude and share revenue with Italy’s largest airline Alitalia. Indeed they’ve placed a bid to participate in taking over the Italian flag carrier which is currently receiving government subsidies after Etihad became the most recent airline to throw in the towel pumping good money after bad into an airline that should just be allowed to die.

The latest from Italy is that the government is driving to close on a restructuring of the airline with the government continuing to pump in money and take a majority stake of the airline (35% of which would be through the state railway) while Delta takes 10% ownership though presumably exercises outsized influence. (Google translate:, HT: Loyalty Lobby)

A package that, after July 15th, the deadline set for the definition of the shareholder structure, will be retouched by just enough to deliver the majority to the state. This is confirmed by sources from the Ministry of Economic Development, …the Minister of Economic Development does not have a list of valid and sufficient proposals to take over the rest of the new Alitalia’s share capital.

The certainty of the commitment of Delta Airlines, which will subscribe a 10% stake, is offset by the uncertainty on the other shareholders who receive the remaining 40% of shares. A missing quota worth at least 300 million euros in terms of recapitalization.

Copyright: jvdwolf / 123RF Stock Photo

So the government kicks in more money to subsidize an Italian airline which flies to the U.S. and it’s A-OK because… the revenue from those flights will be shared with Delta.

(HT: Loyalty Lobby)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. The difference is that Delta, and others that you attack, are simply applying the tax code that all other US companies can do as well. It is an artifact of the tax code. It’s not a specific subsidy for them, as is for many other foreign carriers. The end result is that Delta, and other carriers, still pay a lot more taxes than the ME3…and of course Delta doesn’t get all the freebies that the ME3 get on behalf of their governments.

    The fact is that without the ME3 manipulating open sky agreements and subsidies, very few would fly through the ME, because most people are just connecting, not flying there as a destination. There is no reason for other countries to cede their air traffic to a 3rd party just because their gov’ts will subsidize it more.

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