MIAMI – Italy’s ITA is facing several uphill battles as the carrier approaches the start of operations set to begin on October 15, the same day of the official demise of its predecessor, Alitalia-SAI (AZ).

Unions, representing both flight and ground personnel, have walked away from unsuccessful negotiations on work contracts, pay, and social assistance for those left behind by ITA, a number of at least 7500 workers. According to two Italian newspapers, Il Corriere Economia and Il Sole 24 Ore, ITA is also facing other hurdles.

These range from the acquisition of the AZ aviation branch to today’s announcement by Ryanair’s (FR) Michael O’Leary that he will size the European Court against ITA arguing that the newco is taking advantage of the Italian state help of US$1.06bn (€900m) to AZ. O’Leary argues that ITA, by taking over some AZ assets, has to pay for the debts contracted by the carrier.

On the acquisition of the aviation branch, whose value has been estimated by the administrators at US$177m (€150m), both newspapers report that ITA has made a symbolic offer of US$1.18 (€1) for the whole of it pointing out that debts, maintenance, and costs linked to it amount at least at US$177mn.

The AZ administrators, charged with the liquidation of the airline, have not taken well the public announcement of the offer and have argued that the value o the carrier will be set by an independent expert to be named according to Italian law.

Moreover, the acquisition of the aviation assets includes 52 aircraft, a mix of Airbus A319, 320, and 330 but, if data published by Planespotters are correct, AZ owns a total of 24 aircraft including 12 A319, 10 A320, one A321, and one Boeing 777-200 while the remaining 55 aircraft, including all of AZ 330, are on lease. The number of aircraft is required by ITA to retain part of the slots previously exploited by AZ at Rome-Fiumicino (FCO) and Milano-Linate LIN) airports.

Alitalia Airbus A320-200 EI-DSY – Photo: Alberto Cucini/Airways

Pending Liabilities and Lease Agreements

Along with the aviation branch, ITA may also have to take over some liabilities consisting of US$82.7m (€70m) in debts on owned aircraft, US$71m (€60m) for lease deposits, and US$24m (€20m) on AZ oned engines.

This situation leaves open a major question on how ITA will take over the leases and at what conditions, considering that AZ had entered into lease agreements whose value was deemed to be higher than the market offers.

However, according to Il Corriere, ITA will lease from AZ the aircraft required to start operations but to be replaced by more recent and fuel performant types, apparently from Airbus although the question is still open with Boeing still having the possibility to enter the race.

Alitalia Airbus A330-200 EI-EJJ. Photo: Alberto Cucini/Airways

All Is Hush-Hush

Although Italian media indicate that ITA will also take over the carrier numerical and flight indicators – 055 and AZ – nothing official has come from the EU Commission on this subject or IATA that has the final word on this matter.

As previously announced, ITA will be able to take part in the open tender on the logo and brand. The airline is allowed to retain a majority share in the handling branch and a minority in the maintenance one while the new carrier will be barred from participating in the tender for the AZ frequent flyer program Millemiglia. ITA has already announced its own new program.

One good news for ITA: Michael O’Leary, FR CEO, has declared that he is not interested in the AZ brand, Ryanair (FR) being already well known in Italy while he termed AZ as a “four words” airline. O’Leary also predicted that ITA will not succeed and finish belly up like its predecessor.

As for the first ITA flight on October 15, there is still no word on the event from the newco.

Article source: Il Corriere della Sera, Il Sole 24 Ore, ITA Press Release

Featured image: Alitalia Boeing 777-200 EI-DBK. Photo: Alberto Cucini/Airways