Compensation from Alitalia in light of the airline’s bankruptcy

On 2 May 2017 Italy’s flag carrier airline Alitalia initiated bankruptcy proceedings. On 11 May 2017, Italian courts declared the company’s insolvency.

For many years, Alitalia had been experiencing severe financial difficulties and a steady decrease in transported passengers. Facing severe competition, Alitalia’s share of the Italian market fell from 23% in 2007 to 18% in 2015, according to International Business Times.

Still in operation

As of November 2017, Alitalia continues to operate its scheduled flights. The Italian government ensures that Alitalia continues to operate. According to Bloomberg, the airline received an extra 300 million EUR loan on top of the 600 million EUR loan already granted by the government in May 2017.

Claiming and payment of compensation

Unfortunately, the process of claiming compensation from Alitalia pursuant to Regulation 261/2004 is significantly impeded.

Alitalia’s state of insolvency means that the company is unable to freely manage its assets and thus initiate voluntary payments. No specific end date of the insolvency proceeding is currently given.

The only way to obtain compensation under Regulation 261/2004 is to request participation in the insolvency proceeding before the court of Civitavecchia, Italy. However, if your claim is approved, it will rank below the claims of super-priority creditors and secured creditors, which makes your chances of obtaining compensation very low. Participation in the insolvency proceedings may involve extra court costs and lawyer’s fees.

How AIItalia’s insolvency affects your customer’s rights

  1. You can book flights - Alitalia will maintain operations at least until late 2018. SkyRefund will keep you informed of new developments regarding the airline’s continued operations.
  2. The tickets you already purchased are valid - the declaration of insolvency has not lead to cancellation of flights or annulment of tickets.
  3. You can rebook tickets - the company has not made changes to the rebooking process despite the insolvency proceedings.