Alitalia - The W1nners' Club

 

They say that the devil is in the detail and few companies have been made more aware of this in recent times than Alitalia.

 

A pricing error was made by the beleaguered airline back in 2006 when an advertisement allegedly wasn’t correctly proofread. The unfortunate result was that they ended up offering return business class flights from Toronto to Cyprus for $39, at a discount of $3861 from the usual asking price of $3900.

Naturally, hundreds of eagled-eyed customers on the lookout for a bargain bought the tickets at the $39 price as news of the debacle spread far and wide. Some reports even claim that as many as 2000 travellers took advantage of the randomised rates before the mistake was rectified. Alitalia in the end decided to honour the tickets that were purchased at the discounted price, but stopped selling any more. The loss – even accounting for a significant profit mark up on the face value of the tickets, still amounted to over $7 million. This is cash that Alitalia has since found itself in desperate need of as the Italian government has had to repeatedly step in to keep the airline afloat using state-backed capital.

In that same year they stopped receiving funding from the Italian government as a result of new European Union rules that had come into play and by 2008 Alitalia had declared itself bankrupt.

In 2013, they were on the verge of bankruptcy yet again and Etihad bought a stake in the company in 2014, but its turnaround strategy so far hasn’t generated sufficient earnings.

Alitalia’s board approved a new business plan in March that calls for the carrier to reduce its costs by 1 billion euros by 2019, a point where it expects to become profitable. Unfortunately however, as many as 2,000 full-time and temporary employees may have to lose their jobs should that scenario come into existence.

It would be inappropriate to speculate on the idea that the kind of inattention to detail that led to their pricing woes might have contributed to the company’s larger financial troubles but all we can say is that mistakes do happen.

Here at The W1nners’ Club for example, we hired an intern that turned up to work drunk one morning after playing a gig with his band the night before. The hapless stooge accidentally put our book, The W1nners’ Club Part One for sale on Amazon for 99p for a whole hour and we didn’t sell a single bloody copy!!

 

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