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Air Italy Reportedly on the Brink of Bankruptcy

Air Italy’s inaugural flight landing on approach to JFK’s runway 22L. (Photo: AirlineGeeks | Shaquille Khan)

Italian airline Air Italy could be fighting for its survival and to avoid an imminent grounding, according to reports by Italian newspaper Corriere della Sera.

The carrier, 49 percent of which is owned by Qatar Airways, is expected to report a loss for 2019 superior to the 160 million euros deficit that was reported for 2018, and an emergency board meeting that was planned for February 18 has allegedly been moved up to February 11 because of the liquidity crunch the airline is facing.

Air Italy was created from the original structure of Meridiana and is still 51 percent owned by the Aga Khan, who is unwilling to invest more capital in the venture. Qatar Airways is prevented from injecting more cash in the airline without increasing its ownership share above 49 percent, which would trigger a violation of E.U. rules and therefore the loss of Air Italy’s status as an E.U. carrier.

The Italian regulator ENAC (Ente Nazionale per l’Aviazione Civile) is keeping a close eye on the situation as the carrier continues to look for new investors that so far have failed to materialize. Air Italy’s financial situation has been negatively affected by the grounding of its Boeing 737 MAX aircraft and by some questionable decisions to open several long-haul routes from its Milan Malpensa hub without an adequate feeding network.

Flights to Dehli, India and Bangkok, Thailand were canceled only a few weeks after launch, and all other seasonal and year-round long-haul destinations are served by only A330-200 aircraft, all leased from Qatar Airways.

Due to the ongoing problems preventing the Boeing 737 MAX from returning to commercial service, Air Italy has been forced to lease aircraft from other carriers to cover its own network including 11 short-haul and 14 long-haul routes, further impacting the company’s bottom line.

In 2019 Air Italy found itself in the middle of the ongoing confrontation between some major U.S. carriers and the state-owned airlines from the Middle East that are being accused of “unfair competition” due to alleged state aids. Last April, the CEOs of Delta, United and American likened Air Italy to a trojan horse used by Qatar Airways to provide de-facto fifth freedom services between the E.U. and the U.S.

The company employs approximately 1,200 people split between the airline’s main hub at Milan’s Malpensa airport and its headquarter in Olbia, Sardinia.

Vanni Gibertini

Author

  • Vanni Gibertini

    Vanni fell in love with commercial aviation during his undergraduate studies in Statistics at the University of Bologna, when he prepared his thesis on the effects of deregulation on the U.S. and European aviation markets. Then he pursued his passion further by obtaining a Master’s Degree in Air Transport Management at Cranfield University in the U.K. followed by holding several management positions at various start-up carriers in Europe (Jet2, SkyEurope, Silverjet). After moving to Canada, he was Business Development Manager for IATA for nine years before turning to his other passion: sports writing.

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