Why Alitalia's Courtship of Delta Is Unlikely to Fly

For Italy’s Alitalia, the last dozen years have been a long series of rejections from potential suitors. Now with the airline’s longterm survival in doubt, Italy’s prime minister wants to set up a shotgun marriage—possibly its last great hope—with codeshare partner Delta Air Lines.

At stake is the question whether Italy, one of the world’s top tourist destinations with 62 million international arrivals last year, could become the largest economy in the world without a flagship airline. That distinction is currently headed by Nigeria, whose flagship carrier Air Nigeria closed up shop in 2012.

Since 2000, Alitalia has limped through partnerships or near-partnerships with Air France-KLM (twice), Etihad, AirOne, Lufthansa, EasyJet, and Ryanair, and it has benefited from at least three major government bailouts, including one this year.

The latest rescue plan involves Italian infrastructure company Atlantia and state railroad company Ferrovie dello Stato at the head of a consortium that would also include the Italian Treasury and Atlanta-based Delta as minority shareholders.

Delta has reportedly agreed to take a ten-percent stake in Alitalia for $100 million—less than the amount Alitalia is likely to burn through before Christmas. In addition to its financial commitment, Delta is connected to Alitalia through the SkyTeam alliance that also includes Air France-KLM, Aero Mexico, China Airlines, and Korean Air.

This week, Italian Prime Minister Giuseppe Conte tried to cajole Delta into putting more skin in the game: “A ten-percent stake seems to me a bit low to have a strong business involvement,” Conte told reporters at an event over the weekend.

Delta didn’t take the bait. In a statement to Fortune, the company kept its cards close to its chest. It said only that it “remains committed to maintaining its partnership with Alitalia in the future.” The Italian media quoted Edward Bastian, Delta’s chief executive, as saying, “We are interested in acquiring precisely ten percent of Alitalia.”

Andrea Giuricin, chief executive of TRA Consulting, which focuses on international transportation, has doubts that Delta will ever want to be involved in the day-to-day operations of its Italian partner.

“Delta’s stake is a defensive investment,” Giuricin said. “It’s just enough to make sure a major rival like Lufthansa can’t get more access to the Italian market via Alitalia. For Delta, it’s not that important whether Alitalia survives or not.”

The company is bleeding money at the rate of $1.5 million a day, according to its last financial report, and there is only a one in 13 chance that a passenger flying internationally to or from Italy will use Alitalia.

“For international passengers traveling to Italy, Alitalia is now just the fifth most popular option,” said Giuricin. He said discount carriers Ryanair and EasyJet, Germany’s Lufthansa, and International Airlines Group, the partnership between British Airlines and Spain’s Iberia, all carry more passengers to and from Italy than Alitalia does.

While a blow to national pride, the prospect of Italy losing a flagship carrier is an antiquated concern, says Giuricin.

“Whether Alitalia survives or not is only important to Alitalia,” he said. “For Italy, it’s only important that passengers can get to Italy or not, and we know they can, given that 92 percent of them already do it without using Alitalia.”

The company suffers from a bloated workforce, billions in debt, and an aging fleet: the average airplane in use by Alitalia today is a little over 14 years old, compared to an average of under nine years for the European Union as a whole. In fact, Alitalia has not bought a new airplane since 2012.

Another factor that could give Delta pause is the fragility of the eurozone economy. The 19-country bloc, which includes Italy, is on the brink of recession, with consumer spending particularly in a rut, economists say.