MIAMI – Italia Trasporti Aereo, aka ITA, the newly created public company to replace Alitalia (AZ), will take off on October 15 of this year. And so, the day before will be the last day of AZ, which has been in extraordinary administration since May 2, 2017.

The country’s Ministry of Economy and Finance (MEF), and ITA shareholder, has confirmed in a note covered by Italian news outlets La Reppublica and Corriere Della Sera that the discussion with the European Commission on the constitution of the newco has successfully concluded.

The Ministry states that the new company will be operational from “October 15, the date on which the first flights are scheduled to take off.” Thus, after seven months, the back and forth – not without setbacks and friction – between the offices of the European Commissioner for Competition Margrethe Vestager and the Italian government has ended.

The Italian MEF, whose responsibilities include overseeing economic policy, public investments, and spending, also said simply that “the discussion with the European Commission on the establishment of Italia Trasporti Aereo (ITA) was successfully concluded.”

However, Brussels is set to monitor compliance with the agreements as it seems the unions that asked for a “united company with all 10,500 employees inside it” are to see this demand fall on deaf ears.

Alitalia Boeing 777-300ER EI WLA. Photo: Misael Ocasio Hernandez/Airways

Operating under the Sign of Discountiuity

The discussion with the European Commission – explains the Treasury – has made it possible to reach a constructive and balanced solution, which guarantees the discontinuity necessary for compliance with European legislation.

The positive end of the discussions marks the start of the procedures relating to the capital increase of ITA and creates the conditions for the signing of the Memorandum of Understanding (MoU) for the transfer of certain activities from Alitalia to ITA.

As a result, the next steps foresee an initial liquidity injection in the newco of €700m for 2021, €400m for 2022, and €250m for 2023. With the first payment, ITA will be able to buy the aviation branch of AZ with private negotiations and participate in calls for tenders for the brand, handling, and maintenance.

In exchange, Corriere Della Sera says, ITA will have to sell part of the slots to Milan Linate (LIN), Rome Fiumicino (FCO), and other European airports. As for the transition period, it will be supervised by the extraordinary administration of AZ and the Minister of Labor, which should implement all the protections allowed to accompany workers who are not to go onto the newco.

While the termination of AZ is scheduled for next 15 October, ticket holders for flights after this date will be protected. The dicastery also explains what will become of the employees. Brussels says that “Alitalia workers who could be hired in the new company are 2,800 in 2021 (mostly pilots and flight attendants) and 5,750 in 2022.” This would therefore amount to 8,550 people against the current 10,000 for the old company.

Alitalia Airbus 321-100 EDI-IXH. Photo: Alberto Cucini/Auirways

ITA’s Fleet, Slots, Staff, Route Network

ITA says it will start operations with 52 aircraft (45 for short and medium flights, seven for intercontinental flights) and will increase its fleet to 78 aircraft in 2022. At the end of 2025, the fleet will have 105 aircraft, 81 of which are new generation planes.

As for the carrier’s slots, ITA will sell 15% of those currently owned by AZ to LIN and 57% of those used in FCO, where it expects to grow over the next five years.

Regarding its staff, the hires will be between 2,750 and 2,950 (for the aviation part) which will double in 2025 to 5,550-5,700. ITA says it will issue a new employment contract “that ensures greater competitiveness and flexibility in comparison with other operators in the sector.” Employees numbers could go up if ITA wins the tenders announced by AZ relating to handling (2,650-2,700 staff) and maintenance (1,100-1,250 staff) activities.

Finally, ITA’s network will consist of 45 destinations and 61 routes that are set to grow to 74 and 89 respectively in 2025. Speaking of its future bottom line, the newco explains that an industrial plan has been approved with a turnover that in 2025 will reach €3,329m, with an economic result (Ebit) of €209m and an operating breakeven to be achieved by Q3 2023.

Alitalia EI-ISD Boeing 777-200(ER). Photo: Otto Kirchof/Airways