Goodbye Alitalia. Hello ITA!

On Travelguys we have been telling you for almost two years the adventures of Alitalia with shareholders throwing in the towel, the incessant dance of buyers who end up taking over nothing and in the end the COVID signing the end of the dance with a renationalization of the airline which would have happened anyway.

An airline set up to fail

The bottom line is that in its current form and organization, Alitalia will never recover. You can change the governance, the shareholder, nothing will help. This airline is set up to fail. This is the bottom line that the Italian State has reached in deciding to start from scratch and create what they call the “new Alitalia”.

Its name will obviously be ITA (Italia Transporto Aereo) and it will see the light of day in the coming days, provided that the Italian Court of Auditors gives its approval to the financial package.

Where does ITA, the “new Alitalia”, come from?

It is a 100% state-owned airline with 20 billion euros in assets and a budget of 3 billion euros, which comes exclusively from the Italian Ministry of Economy and Finance.

That’s why we still have to wait for the approval of the Court of Auditors before the operation is finalized.

The assets (aircraft and probably slots) will be transferred from the current Alitalia which will keep its name but will be an empty shell destined to disappear.

What fleet will ITA operate with?

The new business plan is quite ambitious with a fleet of 90 aircraft and 6500 employees.

On this point the Italian airline realizes the dream of many legacies: remove the fat to keep only muscle and get rid of the overweight that all the old airlines have accumulated over the years and which is so difficult to get rid of without causing a social drama and attracting the reprimands of a State that is never too far away and likes its national airline to be socially exemplary.

The irony of the story is that here it is the state that is cleaning up the mess that it was half-heartedly forbidding the former management and potential buyers to make.

For information, before the crisis, Alitalia had 111 aircraft for 11,000 employees (99 employees per aircraft), Air France 270 for 44,000 (162 employees per aircraft), Lufthansa Group 277 aircraft for 130,000 employees (469!!) and British Airways 280 aircraft for 39,000 employees (139)

In comparison, a low cost airline like easyJet operates 339 aircraft with 12,000 employees (35 employees per aircraft).

With a ratio of 72 employees per aircraft, ITA, the new Alitalia has achieved a very respectable score and has given itself the means to be cost competitive.

The aircraft will be transferred from the former Alitalia, with priority, one imagines, for long-haul aircraft.

What positioning for ITA?

With a ratio of 72 employees per aircraft, one might fear that ITA is heading towards a low-cost model, but this is not the case: we are promised a “full service” airline.

Where will ITA fly?

As far as long-haul flights are concerned, ITA will give priority to the United States, which is logical when we know that the transatlantic routes are the most competitive and profitable today. But will they be in tomorrow’s world? The recovery of the traffic is likely to happen by geographical areas it is a bet.

The airline does not rule out looking at Asia, a part of the world where it has never had a strong presence. This may explain it.

As for short-haul flights, we imagine that the airline will concentrate on its most profitable destinations and that its impressive domestic network will be the first to be affected.

In which alliance will ITA go?

Alitalia’s exit from Skyteam was, if not a foregone conclusion, at least almost official for a long time. It seems unlikely that ITA will join the alliance, since it is a new airline that will not inherit the alliances of its predecessor.

However, the new management admits that an airline, especially one of this size, cannot live alone. But rather than a logic of alliance, we seem to be moving towards targeted partnerships on an ad hoc basis.

What are the chances of success for ITA?

If we had to summarize what we think of the former Alitalia, it would be: a poorly organized, messy, unmanageable airline, but offering a good service, even very good in long-haul in the front classes.

If the new, leaner airline is soundly managed without losing any of the qualities it was known for, it would start the recovery with clean accounts, no debt, no overstaffing and could become the “good” surprise of 2021.

With ifs….

Clouds on the horizon

In normal times, the various tricks used to keep Alitalia afloat and then to create ITA, disregarding past debts and engagements, would never have been accepted by the European Union, which was also looking closely at the Alitalia case.

But the COVID changes the situation. We do not imagine Europe preventing such an operation which finally saves an airline and jobs, even if it means closing its eyes to European legislation for a while.

Photo : B777 Alitalia by Matheus Obst via Shuttertock