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Alitalia has come up with a simple formula to stay aloft: Hire a marketing director and an ad agency.

The state airline is fighting to overcome financial losses and a terrible reputation for everything from service to punctuality, evidenced by some frequent fliers' popular acronym-Always Late In Taking-off, Always Late In Arriving-.

This month, Alitalia named Giovanni Mantica, 45, formerly CEO, Nielsen Italia, to fill the long-vacant marketing director post.

Last year as a cost-cutting measure, the advertising account was pulled in-house from Milan shops J. Walter Thompson Co., agency for passenger advertising, and Publicis FCB, which handled the cargo portion.

Mr. Mantica's first priority will be to select an agency from eight candidates including its two previous shops as well as McCann-Erickson Italiana, Lintas, Livraghi Ogilvy & Mather, D'Arcy Masius Benton & Bowles, Pirella Goettsche Lowe, all Milan, and Turin-based Armando Testa.

Although Mr. Mantica was not available to discuss his plans for the airline, others say he has a strong track record. "He really understands consumer marketing," said Jim Allman, a friend of Mr. Mantica's and managing director, Lintas Italia, one agency pitching for the account.

Under Mr. Mantica, Nielsen Italia became one of the company's most profitable operations.

Mr. Allman said Alitalia is moving quickly to become more efficient and customer-oriented. Efforts range from promotions offering frequent travelers a free ticket to the U.S. after several trips within Europe to signs at the airport promising better service, listing a name and number to contact with any complaints.

No budget figures are being disclosed, but last year the airline invested $12 million in advertising and this year so far has spent about $11 million, primarily on a stop-gap press and poster campaign during the spring.

Created by Oliviero Toscani (creator of Benetton advertising), the poster featured a simple flying paper airplane. Mr. Toscani runs a small Milan shop called 2X3, specializing in helping marketers in trouble.

The airline also ran a brief TV campaign using Renzo Arbore, a popular Italian musician and entertainer, to encourage air travel to major international cultural capitals, said Fabio De Simone, Alitalia's head of advertising. This year no TV advertising has run. In the U.S., for example, the airline is running simple radio spots promoting special packages to Italy and print ads in special newspaper travel sections. The U.S. agency of record is D'Arcy Masius Benton & Bowles, and that currently is not under review.

Italian agency executives said the initial presentations are strategic, and these will be followed by a creative pitch after the list is narrowed.

The airline brought in new top management earlier this year after reporting losses of $219 million in 1993. Losses continued in the first half of this year, another $150 million, but the number of passengers has increased, up 11% in the first six months of this year to 6.5 million.

Alitalia CEO Roberto Schisano, formerly CEO of Texas Instruments in Italy, and President Renato Riverso, former Italian CEO of IBM, are trying to navigate the troubled state airline out of turbulence as it prepares for privatization next year.

Mr. Riverso hopes Alitalia will break even by the end of next year and is looking ahead to longer term plans such as creating a separate, low-cost company offering charter flights.

"But first we have to become competitive," Mr. Riverso said at a press conference last month. "For the short term, we are trying to survive."

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