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Alitalia To Sell Assets To New State-Owned Company
The process to rescue the fledgling Italian flag carrier Alitalia as a state-owned carrier realized a decisive step forward on Oct. 29 when the newly-formed company founded to take over all the activities from the “old Alitalia” was formally registered, Italian newspaper Corriere della Sera reports.
The new company is called “ITA – Italia Trasporto Aereo S.p.A.” and has been established with an initial capital of 20 million euros ($23.3 million), but will receive a cash injection of up to 3 billion euros granted by the Prime Minister’s Decree “Rilancio” on May 19.
The documents confirm Fabio Maria Lazzerini as the new CEO with Francesco Caio as the new Chairman, as well as the names of the seven members of the board of directors. The first board meeting could take place as early as the first week of November, and that will trigger the 30-day period at the end of which the new business plan will have to be submitted to the Transport Commission for its approval.
Consulting firm Oliver Wyman is the advisor in charge of creating the new business plan that will define the shape and size of the new Alitalia. According to reports from Italian newspaper Il Messaggero, the company will initially include 75 aircraft and up to 7,000 employees, down from the 92 aircraft operated in September 2020 and the over 11,000 people currently on payroll or on temporary government-assisted paid furlough.
A Clean Cut with the Past?
The next important hurdle to be overcome by this new venture is represented by the European Commission probe into the discontinuity between the old and the new Alitalia. This is a “conditio sine qua non” imposed by the authorities in Brussels to approve the financing from the government and rule out an infraction procedure for illegal state aid.
In order to satisfy the requirements imposed by the European regulators, ITA will have to purchase the assets now belonging to the old Alitalia that it intends to use in the future: the logo, the flight codes — AZ and CT — the IATA ticketing code —055 — the frequent flier program MilleMiglia and Alitalia’s slots at London Heathrow airport. There are no standard methods to quantify the value of all these assets, but airline experts have estimated the cost of all these elements at approximately 220 million euros, Corriere della Sera reports.
ITA will also need the Air Operator’s Certificates (AOC), one from Alitalia itself and one from CityLiner, the airline’s regional subsidiary. These are the only two AOCs that are still in existence from the old carrier, even though Alitalia had maintained until a few years ago up to five AOCs in order to operate more frequencies from the tightly regulated Milan’s Linate Airport. Alitalia currently holds close to 70% of the slots at the coveted city airport in Italy’s economic capital.
London Heathrow slots owned by Alitalia total 68 during the IATA summer season and 65 during the winter season. Their value has considerably decreased since the beginning of the coronavirus pandemic, as the collapse in demand has forced airlines to cancel dozens of frequencies at London’s main airport with numerous slots now sitting unused or under-utilized.
It is unclear at this stage whether Alitalia’s designations for international markets regulated by bilateral agreements will be automatically passed on to ITA or if a new designation will have to be approved by the government.
Flight codes and ticketing codes will also carry with them some significant liabilities, estimated to be approximately 80-100 million euros, represented by unflown tickets already sold for future flights.
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