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Air Italy Shuts Down, Shareholders Liquidate The Company

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Air Italy Shuts Down, Shareholders Liquidate The Company

Air Italy Shuts Down, Shareholders Liquidate The Company
February 11
21:32 2020

MIAMI — After a shareholders’ meeting of Air Italy (Alisarda and Qatar Airways [through AQA Holding spa]), the decision was made to liquidate the entity and cease all its operations effectively as of today.

To minimize any inconveniences for passengers holding Air Italy (IG) tickets, the company informed that as of today,” all Air Italy flights will be operated by other carriers at the times and on the days previously scheduled.”

Photo: Ed Pascuzzi

However, all passengers who booked flights after February 25, 2020, will be re-protected or fully refunded. 

The following statement was published by the airline on its website today:

  • All scheduled flights (outward or return) up to and including February 25, 2020, (including the first departures on the morning of February 26, 2020, of domestic flights to Malpensa and from Male and Dakar airports) will be regularly operated, without any changes to the original scheduled dates and times and on the same flight conditions.
  • Passengers will be able to fly using their tickets. Alternatively, passengers can always opt for a full ticket refund by emailing the following address refunds@airitaly.com (or contacting their travel agency) prior to their flight’s departure time.

For all tickets scheduled to depart by 25 February 2020 and to return after February 25, 2020:

  • The outward journey will be regularly operated, without any changes to the original scheduled dates and times and the same flight conditions; with regards to the return flight, passengers will be offered a travel option on the first available flight of another carrier, the details of which will be provided from February 18, 2020, by calling the following number from Italy: 892928, from abroad: +39078952682, from USA: +1 866 3876359, from Canada: +1 800 7461888, or by contacting the travel agency in the case of purchase through this channel.
  • Alternatively, passengers can opt to claim their refund for unused flight segments, by emailing the following address refunds@airitaly.com (or by contacting the travel agency if the ticket was purchased through it) prior to the flight’s departure time.

Tickets for return flights after 25 February 2020:

  • If purchased directly via the web (Air Italy portal) or Air Italy contact center, they will be fully refunded in a manner that will be provided via email or requesting it at the address refunds@airitaly.com
  • If purchased through the Air Italy ticket office, they will be fully refunded by going to any Air Italy ticket office
  • If purchased through a travel agency it will be necessary to request a refund or a change of travel by contacting the agency

It is important to note that “all bookings for which the travel document has not been completed through the purchase of the ticket will automatically lapse.” said the company in its official statement.


From the grounding of the 737 MAX type, syndicate trouble, the carrier’s opening and closing of routes in a short timeframe to a lack of direction, IG has been peppered with bad signs for the last 12 months.

737 MAX 8s grounding aftermath


The Italian airline was one of the first in Europe to take delivery of the 737 MAX from an order for 60 jets originally placed by Qatar Airways. Although IG had only three 737 Max 8 jets in the fleet, the cost of the grounding was definitively felt by the company.

IG was using three MAX aircraft received from the mentioned order to service routes to Sharm El Sheikh, Cairo and Dakar before regulators around the world grounded the fast-selling Boeing jets following two fatal crashes.

An Air Italy 737 MAX was en route to Cairo, Egypt when Europe announced a ban on all variants of the type.

Alas, with a fleet of just 13 aircraft, Air Italy had to lease two Embraer jets and their crew from Bulgaria Air to cover routes heading into the peak summer travel season, 2019.

According to Alex Machera, as a result of the 737 MAX ban, IG was left with a surplus of pilots. Moreover, because Air Italy’s pilots and crew were not trained on the Embraer, their work hours inevitably fell.

To make matters worse, IG shelved its initial plans to equip its long-haul fleet with Boeing 787-8 Dreamliners in favor of a potential all-Airbus fleet, whose deliveries had suffered delays due to engine mechanical issues, forcing the grounding of hundreds of aircraft at that time.

Syndicate trouble over the Olbia-Milan staff transfer


Embitteringly, two months after the airline received its first of 20 Boeing 737 MAX 8s, the syndicates cut dry their honeymoon period with Air Italy’s executives.

Akbar Al Baker’s investment in the Italian carrier became jeopardized when Air Italy’s syndicates threatened to strike due to the airline’s decision to transfer 51 ground staff from Olbia, Sardinia (OLB) to Milan-Malpensa (MXP) to aid the carrier’s massive growth plans.

“Air Italy is making decisions unilaterally,” said William Zonca, Secretary at Uiltrasporti (Italian Flight Attendant Syndicate – Sardinia). “Breaking the established system of union relations will lead to new strike actions,” he said.

The syndicate’s leader declared that reducing by 16% of the total workforce in Sardinia is nothing but a sign of further reductions with the airline’s planned growth in Milan, and not in Olbia.

“The airline should stop the transfer of 51 working positions and instead, should promote a true industrial and development plan,” said the syndicate at the time of the threat of new strike actions.

In response to the threat, Marco Rigotti, the airline’s CEO, countered, “Should our company be constrained to operate in a hostile environment, the Air Italy project—an already challenging and difficult one to carry through—will be abandoned.”

To alleviate things, Rigotti said that IG would open ten new working positions in Olbia at its maintenance center, which will perform all line and heavy maintenance on all its future 20 737 MAX 8s and 30 787-8s.

Opening and closing of routes in short timeframes


IG’s expansion plans were to have its footprint everywhere it could, opening cities and closing others without hesitation. However, after the 737 MAX debacle, the niche markets were mostly gone, and IG decided on building a strong Milan hub.

From Milan, IG tried to consolidate short-haul flights to Rome, Naples, Palermo, Lamezia Terme, and Catania. It wanted to use those markets to feed customers into its long-haul strategy.

These were the new long-haul routes launched in a year’s time:

CITYEFFECTIVE
New YorkJune 2018
MiamiJune 2018
BangkokSeptember 2018
MumbaiDecember 2018
Delhi December 2018
Los AngelesApril 2019
San FranciscoApril 2019
TorontoMay 2019
ChicagoMay 2019

IG took a gamble in adding frequencies in 9 cities while expecting these markets to grow fast, especially after its recent launch. But the plans to expand in such a quick manner seemed to be too good to be true.

Chicago service was killed months before it even started flying. The airline then increased frequencies in Miami and Toronto for the summer. Finally, it killed all Asia operations with little notice, abruptly ending flights to Delhi, Mumbai, and Bangkok.

Lack of direction


Granted, for IG, ultra low-cost carriers the likes of easyJet and Ryanair were tough competition for the recently restructured airline, both on short and long-haul flights, Alitalia was also still alive and kicking, which made IG’s expansion more difficult to follow through.

Nevertheless, Qatar Airways wanted to develop IG into a full-service airline with business class on all flights, an endeavor more difficult in practice than in theory. It was a bullish move on its part.

Another problem for IG’s executives surfaced when US carriers blamed Air Italy for being a Qatar Airways tool, looking to threaten the United States by connecting its hub in Doha through Air Italy’s Milan base.

IG issued a press release in which it defended itself against allegations made by American Airlines (AA), Delta (DL), and United (UA), that it is a threat to the US market, sidestepping the open skies agreement between the US and Qatar.

Considering all the above, and that Qatar Airways’ partial ownership of the carrier landed IG in some trouble with the US Big Three, its plans for growth seem now not only riddled with obstacles but also perhaps too ambitious.

Qatar Airways blames Alisarda for Air Italy’s demise


Akbar Al Baker, Qatar Airways Group CEO, has repeatedly noted in the past that he and his airline are only minority shareholders in the Italian carrier, and had no weighing in the decision-making process of IG’s strategies.

IG officialized a partnership with Qatar Airways in April 2018, under a new codeshare agreement that would offer its customers several connections between seven major destinations in Italy, Qatar, Maldives, and Singapore.

Today, Qatar Airways has stated the following:

Since the acquisition on September 28, 2017, of a minority stake in Air Italy, Qatar Airways has strongly believed in the company and in its potential, supporting management’s proposed business plan with a view to improving Air Italy’s growth and job creation, with the addition of long-haul routes and numerous in-flight service improvements, in line with Qatar Airways’ globally renowned high standards.

Despite our minority shareholder’s role, Qatar Airways has continuously provided all possible support to Air Italy right from the beginning, from releasing aircraft from our fleet and ordering new aircraft for Air Italy, to backing management choices and injecting capital and investment as required and permitted.

Even with the changing competitive environment and the increasingly difficult market conditions severely impacting the air transport industry, Qatar Airways has continually reaffirmed its commitment, as a minority shareholder, to continue investing in the company to create value for Italy and the traveling public and to provide support for Air Italy and its staff because for Qatar Airways the focus on employees is a core priority in its strive for excellence – in addition to supporting local communities and other stakeholders.

For this reason, Qatar Airways was ready once again to play its part in supporting the growth of the airline, but this would only have been possible with the commitment of all shareholders.


Article written by Helwing Villamizar

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