MIAMI – Alitalia’s (AZ) epic is finally approaching an end, and it appears that it will not be a happy one for the Italian legacy carrier.

According to the newspaper La Repubblica, Italian Ministers Daniele Franco, Finance and Economics, Giancarlo Giorgetti, Economic development, and Enrico Giovannini, Infrastructure, in charge of the AZ situation, have reached an agreement with Margrethe Verstager, EU Commission Vice President and Head of the Commission on Competition Policy. The agreement should undergo its final discussions and closure in the course of next week. Here’s the gist.

The revised plan presented by the troika of Italian Ministers, foresees the renouncing of the historical brand, meaning that AZ will, at best will go into storage or into final retirement. The end of the historic airline brand will also see heavy restructuring and reduction of activity, staff, fleet, along with a downed revision of investments and revenues foreseen by the new business plan.

In detail, the restructuring, adopted to meet stringent requests by the Commission, will touch the 75-year-old AZ brand – the NewCo will be ITA-Italia Trasporto Aereo – and the logo that goes with it. The restructuring will, though, leave the possibility for ITA to participate in an open tender for the sale of AZ assets.

Alitalia Airbus 321-100 EI IXV – Photo : Milan Witham/Airways

Reduced Fleet and Personnel

Next would be the fleet, undergoing a 41% cut, which would set the aircraft count at 43-45 out of the current fleet of 103-110. In addition, the personnel will be brought down to 26%, of the current 11,500 employees for a total of 2,850 staff members. Solidarity-based employments may help to increase these numbers.

On these bases, the staff “flight sector” shall be trasferred from AZ to ITA directly while the rest would have to go thru the open tender procedure. Further, ITA will be banned ffrom acquiring the frequent flyer program MilleMiglia, which shall go to other parties, AZ handling will be partly handed over but only for its passenger’s services while baggage handling must go to thru the tender.

The same is to follow for the maintenance division, out of which only the “line maintenance” may be retained by ITA while the rest has to go to a third party with the NewCo to be allowed to become only a minority shareholder.

Last but not least, there is the issue of the slots at various airports, mainly in the highly lucrative Milano-Linate (LIN) hub. 8% has to be handed over to other competitors, a total of 98, with 54 of them in LIN and FCO, and with the balance to be alienated at other airports.

Alitalia’s Boeing 777-243ER rotating from LAX airport. Photo: Luca Flores/Airways

Reduced Financing

One more crucial element is the financing for the NewCo. Only US$2bn (€ 1.7bn) of state financing will be allowed, out of an initial amount of US$3.5bn (€3bn). The new amount will thus be divided into two allotments, the first being of US$1.4bn (€1.2bn) to be followed later in time by a second injection of the balance.

Alas, it seems the fate of AZ is not exactly a happy one for a history that lasted 75 years and strong reactions are expected from despised unions and AZ personnel.

Featured image: Alitalia Boeing 777-300ER EI WLA – Photo: Misael Ocasio Hernandez/Airways