Ita, I’ll tell you about Alitalia’s failure
Alitalia / Ita? An announced failure. The analysis by Alfredo Roma, formerly at the top of Enac, taken from International Affairs
The take-off of the new national airline, Ita (Italy Air Transport), seems to have all the characteristics of an “aborted take-off”, as a missed take-off is called in aeronautical terms. Recent events are a clear indication of this. In recent weeks, Ita has obtained the Air Operator Certificate (Coa) and the operating license, but one gets the impression that these certificates have been issued "under conditions", given that one of the requirements for issuing the Coa is the training of pilots, which have yet to be hired.
Ita has announced the start of intercontinental flights from 15 October, but these flights must be operated with aircraft in possession of the Type Approval Etops ( Extended Range Twin-engine Operational Standards ), enabled to fly up to 180 minutes of flight from the nearest airport, i.e. to cross oceans. Even if Ita buys Etops-enabled long-haul aircraft from Alitalia, it will not be able to use them until it has set up the relevant organization. And this takes a long time.
TRADE UNIONS AND DISCONTINUITY
The first meeting with the unions started very badly and ended with the proclamation of a strike (obviously by Alitalia staff; Ita has few employees for now) for 24 September. The unions are also irritated because Ita wants to stay out of Assaereo in order not to be bound by the national labor contracts of the sector. The executive president Alfredo Altavilla comes from Fiat, which Marchionne brought out of Confindustria for the same reason. President Altavilla communicated to the trade unions his intention to continue with a company regulation or with a company collective agreement. The relationship between the company and the trade unions has always remained tense even in subsequent meetings.
The discontinuity requested by the Commission appears objectively ridiculous. Ita buys planes and slots from Alitalia and hires some of its staff, which are the essential assets of an air carrier. If Ita then won the tender for the Alitalia brand, everything would be exactly the same as before, that is, no discontinuity. Regarding the Alitalia brand, it is known that Ryanair is very determined to buy it. We could therefore find ourselves with Ryanair flights operated with planes bearing Alitalia livery and brand. A lot of confusion for potential customers too.
Then there is the sad process already seen in 2008: as authorized by the European Commission, Ita buys from Alitalia the assets and personnel necessary to start the new "aviation" activity on October 15th, then what remains of Alitalia will be put into liquidation. and this will cause another substantial loss for the taxpayer and for Alitalia's suppliers.
SIZE MATTERS
In 2019, in Italy the passengers of internal air traffic were about 64 million, while international traffic recorded 128 million passengers. The Italian market is therefore very interesting for other European airlines.
At the start of the activities, Ita will operate with 52 aircraft to grow, in 2022, to 78 aircraft. At the end of 2025, the fleet will reach 105 aircraft, with 81 new generation aircraft. The purchase of 81 aircraft means an investment of over $ 9 billion. Or will they be taken on a very expensive lease? It is difficult to understand how the inclusion of new generation aircraft can take place economically and financially, given that the industrial plan of Ita to 2025 (Ebit of 209 million) is totally unreliable in its modest values, because we do not even know if and how air transport will be able to recover after the blow suffered by the pandemic.
In 2025, the size of Ita will therefore be that of a small company that certainly cannot compete with Air France-KLM (573 aircraft, of which 173 are long-haul), Lufthansa (218 aircraft, 80 of which are long-haul), British Airways ( 263 aircraft, 90 of which are long-range). Over the past 15 years, with the gradual contraction of Alitalia, these three carriers have increased flights to London, Paris, Frankfurt and Munich from many Italian airports with discounted fares, because profitable intercontinental flights depart from those European hubs.
Alitalia was part of Sky Team, one of the three major international alliances based on code-sharing agreements that allow you to fly around the world with a single airline ticket. The other two alliances are Star Alliance (Lufthansa) and One World (British Airways). Will Ita be able to join one of these alliances?
IMPROBABLE COMPETITION
In this scenario, Ita appears as a modest-sized company that will struggle to compete even with low-cost carriers (Ryanair alone has 300 aircraft) and therefore to survive for a long time. It is difficult to define it as a flag carrier (as some politicians think) of a country that is one of the seven world economic powers. At the same time, it is sad to see a company like Alitalia, which for 85 years has carried the Italian flag around the world, come off the radar.
This dramatic situation was clearly summarized by Giulia Lupo, 5-star senator, who said: “It is madness to use up to 3 billion euros to get eaten by the market”. This is perhaps the fate of Ita. It therefore seems to be another announced failure.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/ita-alitalia-fallimento/ on Sun, 05 Sep 2021 14:33:51 +0000.