Ita Airways’ 2023 accounts under X-ray
How Ita Airways is doing and how it will go in the coming years. Facts, numbers, scenarios and comments
On 26 March 2024, the board of directors of Ita Airways approved the 2023 budget project, which was then the subject of a presentation to the press at the carrier's headquarters in Fiumicino which took place yesterday.
The company with the president Antonino Turicchi (in the photo) and the general director Andrea Benassi wanted to underline how the accounts are clearly improving compared to 2022 and communicated some salient data, but not all.
Here are facts, numbers, scenarios and commentary from industry expert Cristiano Spazzali .
ITA AIRWAYS 2023 ACCOUNTS
As regards revenues, according to the carrier's management these amount to 2.4 billion euros, recording a +58% compared to the previous year, the gross operating margin (Ebitda) is positive for 70 million, an improvement of 407 million, the operating result (Ebit) instead is negative for -75 million, an improvement of 514 million.
THE INCOME STATEMENT OF ITA AIRWAYS
A small loss (5 million) must be recorded in the income statement, compared to the red of 486.2 million in 2022. The results are therefore better than the forecasts of the industrial plan. However, it seems that this result, which cannot be said to be positive, was the result of the application of some financial technicalities (usual in companies but which have little to do with the productivity of the carrier). In fact, again according to Ita's management, these results benefited from some non-characteristic revenues of around seventy million, which were generated by two elements: the revaluation of the former Alitalia assets, including the brand, which had been devalued in 2022 , and advance taxes (therefore with the + sign) recorded on the basis of a request to the Revenue Agency, which responded positively, on the possibility of being able to operate tax recoveries in the budget.
REDUCED LOSS
The use of these two positive elements is the explanation for a limited operating loss of -75 million (Ebit), and why the net loss is significantly lower. (-5 million). The net equity as of 31.12.2023 however is equal to 750 million, the cash at the end of the year is 450 million, including the 250 million of the payment of the capital increase made in the summer by the Ministry of Economy, therefore 26 million in more than 2022. On the other hand, the company did not want to disclose what its net financial debt is at the moment, from which it could have been deduced that both investments and short- and long-term debts also affect the current cash flow.
Ita underlined that the company has thus reached operational break-even one year ahead of the forecasts of the Industrial Plan thanks to very positive operational and commercial performances.
THE FACTORS THAT HAVE AFFECTED THE ECONOMIC RESULT
It is clear that the financial technicality adopted by Ita is not very suitable for productivity and the budget result obtained of -5 million, which is 258 million lower than that envisaged by the industrial plan, must be interpreted according to the experts. Last year Ita transported 14.8 million passengers (+47%). Passenger revenues amounted to 2.2 billion (+67%). The division by airline concerned sees approximately one billion in turnover generated by intercontinental flights, 700 million produced by domestic flights and 500 million by international routes. Investments in 2023 are quantified at 288 million, and the fleet (Airbus only) at the end of the year was made up of 85 aircraft, 66 for short and medium range operations, 19 for long range routes if the Airbus A321s are also counted. This year ITA expects to receive an additional 26 airplanes.
THE LUFTHANSA DOSSIER ACCORDING TO TURICCHI
Regarding the EU authorization for the marriage between ITA and Lufthansa, ITA leaders said that there is an ongoing discussion with the Commission to get the agreement approved quickly. On 25 March Brussels communicated to the interested parties ( Mef and Lufthansa) that there are 39 ITA routes on which, following the agreement with Lufthansa, monopoly conditions would be created on certain routes and therefore an excessive restriction of competition. One of these requests concerns the renunciation of a share of the slots at Linate, where Ita currently holds around 60% of the slots and together with Lufthansa it would rise to 66%. President Turicchi then wanted to deny all the rumors relating to the existence of a plan B in case the agreement with the Germans were to fail and underlined how the marriage between Ita and Lufthansa is not an operation to save Ita, but for the growth of the company so that it can be more competitive.
THE NEWS ABOUT ALTAVILLA
And just as Ita's press conference was ending, the news arrived that the Rome Public Prosecutor's Office had requested the dismissal of the proceedings against the ex-executive president of Ita Airways, Alfredo Altavilla. The prosecutors in charge of the file found that the crime report was unfounded and with this reason they rejected the accusations made against him by the then CEO Fabio Lazzerini who had accused Altavilla of alleged corporate infidelity. The final word will now be up to the GIP of the Court of Rome who will have to decide on the request for dismissal, against which Ita's lawyers have already lodged an opposition.
THE UNION STATEMENT
But the day for Ita did not end here, in fact, still on the sidelines of the press conference for the presentation of the budget data, the transport unions belonging to the acronyms CGIL-CISL-UIL and UGL, through a joint press release , after having discussed with the carrier, underlined how the results turned out to be lower than the forecasts of the industrial plan, due to the complex geopolitical situation in the Middle East and the general delays in the delivery of aircraft by Airbus, with average waits of 6 months for each machine. On this point there is therefore a different vision of the trade union organizations compared to that of the Ita management.
THE UNIONS NOW BEAT THE CASH
The unions then continued to analyze the carrier's data, stating that as regards 2024, ITA Airways expects to reach 3.5 billion euros in revenues. The first quarter of 2024 recorded an average load factor of 78% (+5% on the same period of 2023) and a specific long-haul load factor of 83%. These data confirm the transition from a company in the start-up phase to a consolidated airline on the market, with safety, regularity and punctuality data that have reached peaks of excellence: from 87% of regularity and punctuality of the airline's operations In fact, in the first two months of 2024, 2023 achieved punctuality of 88.9% and regularity of 99.9%. The Trade Unions they requested further data from the company's management. The total CASK was 0.8 cents and the RASK was 7.9 cents. Both figures decreased compared to the previous year. As regards Ebit, the overall costs were found to be equal to 2 billion euros, of which 286 million for personnel. And here's the real news: the union, supported by these numbers dissected by the national carrier, is preparing to raise cash and explains that in light of the results communicated by Ita, "the undersigned Trade Union Organizations have requested to urgently proceed to address and resolve the critical issues reported in the unitary letter requesting a meeting recently sent and, finally, to start the preparatory work for the renewal of the Carriers section CCNL and the supplementary Collective Labor Agreement for ITA Airways employees, thanks to whose commitment it was possible to achieve the results illustrated. These results must necessarily lead to the right recognition for the work carried out by the people of ITA Airways".
SPAZZALI'S COMMENT
“We are all happy that Ita has obtained satisfactory results, even if the result is the result of a financial technicality and not of real productivity – commented sector expert Cristiano Spazzali to Startmag – It is well known that last year there it was a boom for air transport, in fact the summer of 2023 recorded sales peaks never seen in recent years also following the post-covid era. Ita was only able to benefit in part from these peaks as the SkyTeam alliance removed some long-haul code-share flights with Ita from the alliance's systems following the agreement reached by the MEF with Lufthansa. This certainly generated lower income for Ita which I estimated to be more than 150 million euros. But not only from the data in my possession, for example, on the flown in March of this year, Ita was unable to optimize the use of the fleet, especially on long-haul flights where the average daily flown was around 11.5/ 12.5 hours per machine”.
If you take Lufthansa, adds Spazzali, the daily average on long-haul planes almost never drops below 14 hours, even reaching peak usage of 16 hours a day: "This could mean two things or that the flight operations management doesn't know how to run the machines, or that there is a maintenance problem. In both cases this is an element that should not be underestimated. On the marriage with Lufthansa I have already widely expressed my belief that on long-haul routes the commission is making a technical error in including Joint Venture Star Alliance in the cauldron. On Linate, however, the issue is less complex because Ita would do well to give up some slots. It would be enough to insert more capacious planes on the longer routes in order to compensate for the cut in flights and the damage would be marginal."
On the Altavilla issue, Spazzali comments: “What I said two years ago: the airline is a delicate machine in some ways and should be placed in the hands of just one person. We cannot think of joint management, the risks we run are those that we find today in the dispute between the carrier and the former president Altavilla and which could fall on whoever arrives after management".
And the demands of the unions? “I wouldn't have expected anything different – replies Spazzali – As I have always maintained, Ita is a very unionized company and it is logical that today, after Ita has announced that it has recorded these very positive numbers in 2023, it wants to move on to collections even before Lufthansa makes its entrance."
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/i-conti-2023-di-ita-airways-ai-raggi-x/ on Thu, 28 Mar 2024 13:20:13 +0000.