Founded on 16th September 1946 in Rome, Italy, Alitalia Airlines will be bidding farewell on 14th October 2021 as it will be replaced by the newly created public company Italia Transporti Aereko(ITA).
In a statement, the country’s Ministry of Economic and Finance and ITA shareholders confirmed that the discussion with the European Commission on the new airline company replacing Alitalia was successfully concluded.
The ITA is set to commence its first flight on 15th October 2021, marking the end of the Alitalia era.
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Alitalia Bankruptcy
The Italian airlines had been under the administration since 2017; the company was barely able to stay afloat with the 5 billion Euros of public money. The final blow was delivered by the huge damage taken by the aviation industry due to the Covid-19 pandemic, Alitalia which was already under huge debt, took the hardest blow of them all.
Without any possibility of keeping the service running, the government decided to establish a new company to carry the legacy of Alitalia. The proposal was standstill for months due to the European Union demanding clear separation between the bankrupt airline, Alitalia, and the new replacement company Italia Transporti Aereko. The European Commission and the Italian Ministry finally found common ground where discontinuity of Air Alitalia and clear separation were agreed upon.
The negotiation primarily focussed on making the ITA an independent company separating it from Alitalia so it wouldn’t be liable for paying back the billions of euros the older-Italian carrier had received as state aid.
ITA Successor of Aitalia
The ITA, which will be fully operational from 15th October 2021, will set the goal to raise the capital of 700 million euros. If ITA is able to uphold this end of the deal. In that case, it will have the right to buy the abbreviation branch from Alitalia through private negotiations and participate in calls for tenders for owning the Alitalia brand, including handling and maintaining other assets.
As the ITA keeps increasing its capital in the following years of the service, it will create the signing of the Memorandum of Understanding(MoU), part of the European Commission and ITA agreement, which will allow the new airlines to transfer certain activities from the older-carrier Alitalia onto its own. After accomplishing the 700 million euro initial liquidity injection, the new airlines will have a goal of collecting the capital of 400 million euros in 2022 and 250 million euros in 2023.
The expected revenue for the new replacing airline is around 3.3 billion euros in 2025 and a break-even point by the third quarter of 2023.
Routes and Fleet Size
Although ITA has to buy assets directly from Alitalia for its operation and bid in the public tender to acquire the older carrier’s brand( European Union’s agreement deal), it will only get part of the old carrier’s slots. The new airlines will get 85% of the Alitalia slots at the Milan Linate Airport and just 43% at Rome’s Fiumicino hub. ITA provides services to famous destinations like Paris, London, Frankfurt, Brussels, Geneva, and Amsterdam from these two major tourist hubs.
Furthermore, the Italia Transporti Aereko will be accompanying its passengers to 45 destinations in its initial phase with 61 travel routes. Including its service flights to New York from Milan and Rome, Tokyo from Boston, and to Rome from Miami. The airline’s travel destination is set to grow to 74, with 89 routes by 2025.
The successor of Alitalia is currently planning to operate its service with 52 aircraft, seven wide-body jetliners, and 45 narrow-body aircraft with the plan of adding 26 aircraft to its fleet. By the end of 2025, the fleet size will be increase to 105, including 81 of the new generation aircraft to meet demand and quality of the time.
Alitalia currently has about 10,000 employees; the new successor of the old carrier is set to start with just 2,800 in 2021, which will include most of the pilots and flight attendant staff from the old airline. For the 2022 recruitment, the new airline has allocated around 5,750 vacancies; this plan will leave out almost 72% of the employees from Alitalia in the first half and will be deduced to around just 15%. Regarding recruitment, the ITA has stated that all the hired employees will receive new contracts even if they are from Alitalia to promise better competitiveness and flexibility from the company.
