Category Archives: ITA-Italia Trasporto Aereo

European Commission rules on €900 million State aid granted by Italy to Alitalia and favorably on Italy’s capital injection of €1.35 billion into Italia Trasporto Aereo (ITA)

The European Commission on September 10 has taken two decisions concerning the aviation sector in Italy.

In the first, we have found that two loans that Italy granted to Alitalia in 2017, for a total of 900 million euros, are illegal under State aid rules. Italy must now recover this amount from Alitalia.

In the second decision, the Commission has reached two important conclusions:

  • First, we have found that the new state-owned airline, called Italia Trasporto Aereo – or ITA, is not the economic successor of Alitalia and is therefore not liable to repay the illegal State aid received by Alitalia.
  • Second, the Commission has found that Italy’s capital injections of 1.35 billion euros into ITA are in line with market conditions, and therefore do not amount to State aid.

Both decisions are important to help restore a level playing field in the European aviation sector, while ensuring air connectivity in Italy and protecting consumer rights. This is especially important in an industry that has been hard hit by the coronavirus pandemic.

The negative decision on Alitalia

Let me now go through the details, starting with the decision concerning Alitalia.

Alitalia’s financial difficulties go back a long time. There have already been a number of attempts to restructure the airline. Since 2008, when a group of private investors purchased a controlling stake, the company has made losses every year.

In 2017, Alitalia was in urgent need of liquidity. However, it had lost access to credit markets due to its financial situation. So Italy gave two state loans to the company worth 900 million euros. At the same time, Alitalia was placed into special bankruptcy proceedings.

In 2018, the Commission opened a formal State aid investigation, following a notification from Italy of the two loans as rescue aid for Alitalia. We also received a number of complaints from other airlines concerned about the impact on fair competition.

Alitalia’s financial position remained unsustainable, and at the end of 2019 the company was again in urgent need of cash. This is when Italy granted the airline another loan worth 400 million euros. Also in this case, the Commission received a number of complaints and opened a second formal investigation in early 2020. This investigation is ongoing, and we expect to be able to adopt a final decision soon.

With respect to the 900 million euros loans, the in-depth investigation has shown that first, the loans amount to State aid for Alitalia, and second that they are illegal under State aid rules.

First, we found that, when Italy granted these loans, it did not act as a private investor. It did not make a prior assessment of how likely it would be that the loans would be repaid by Alitalia, with interest. Our assessment of Alitalia’s financial situation in early 2017 showed that repayment was very unlikely – and, as a matter of fact, the loans have not been repaid to this day. Since no private lender would have granted the loans to Alitalia at the time, they amount to State aid in favor of the company.

Second, the loans could not be approved as rescue aid in line with State aid rules for companies in difficulty. That’s because the loans were not reimbursed within six months, and there was no restructuring plan to return the company to viability nor a liquidation of the company.

Our conclusion is therefore that the two loans gave Alitalia an unfair advantage over its competitors on national, European and world routes. Hence, they constitute illegal State aid, and must now be recovered by Italy from Alitalia.

Economic discontinuity between Alitalia and ITA

I now turn to the second decision we have adopted today.

In 2020, Italy established a new air carrier ITA. ITA plans to take over parts of Alitalia’s business.

Under our rules, a new company is not liable for past aid received by the seller, if the two companies are sufficiently different from one another. In other words, if there is a clear break between them, so-called “economic discontinuity”.

Our second decision concludes that there is economic discontinuity between ITA and Alitalia. This means that ITA will not be liable for the 900 million euros that Alitalia has to repay following today’s decision.

In line with established case law, this is based on a global assessment looking at a number of different factors:

First, looking at the aviation assets transferred, ITA will take off with a significantly reduced perimeter of activities. It will operate less than half of Alitalia’s aircraft, fly to fewer destinations and drop a number of loss making routes.

ITA will also only use a limited number of Alitalia’s take-off and landing slots that corresponds to the number of aircraft that it will operate. The other slots previously used by Alitalia, including at congested airports in Rome and Milan, will be released.

Second, ITA will not take over significant parts of Alitalia’s non-aviation businesses: Alitalia’s ground handling and maintenance businesses will be sold in open and competitive tenders. In these tenders, ITA will only have the opportunity to bid for the ground handling business in Rome Fiumicino Airport, and for a minority stake in the maintenance business.

Third, Alitalia’s brand will also be sold in an open and competitive tender to the highest bidder.

Fourth, ITA will have a more sustainable cost structure, especially in terms of labor and fleet costs. It will hire a significantly reduced number of staff from the market, including from Alitalia, but under new labour contracts, based on market conditions. It will also gradually modernize its fleet with new-generation fuel-efficient aircraft.

Finally, in order to be sure that there is no direct transfer of customers from Alitalia to ITA, ITA will not bid for Alitalia’s loyalty program.

ITA will therefore be a different company from Alitalia. It will take off as a streamlined airline. This is crucial for the long-term viability of ITA.

The launch of ITA

As part of the second decision adopted today, we have also assessed capital injections worth 1.35 billion euros that Italy intends to grant to ITA. These will be injected over the next three years, with an initial 700 million euros this year.

State aid rules are neutral on public versus private interventions. That’s why the State can invest in companies, on terms that a private operator would also have accepted, without it being State aid.

Our assessment of ITA’s business plan has shown that Italy is investing in ITA in line with market conditions. This is also confirmed by three independent expert reports submitted by Italy.

And this is a crucial difference compared to the two loans in favour of Alitalia, on which we have adopted a negative decision today.

The business plan foresees that ITA will be a viable airline, with sustainable costs and staffing, flying to a limited number of destinations with a focus on the profitable routes. Moreover, the business plan assumes future cost reductions stemming from the modernisation of ITA’s fleet, which will result in lower maintenance and fuel costs.

On this basis, the expected returns from Italy’s investment in ITA are estimated to be higher than the cost of equity. We therefore concluded that the Italian intervention in ITA does not constitute State aid under EU rules.

Conclusion

Today marks a fresh start for Italy’s air transport, which had to overcome many challenges. I want to stress one point that was important to us, the interests of passengers: Italy will fully refund Alitalia customers, in case Alitalia fails to honor tickets when it stops flying.

Once ITA takes off, it is for Italy and the management of ITA to make use of this opportunity, once and for all. To establish an airline that is viable, operates on an equal footing with its competitors, lives up to sustainability ambitions, and that will be successful for a long time to come.

The right groundwork has been laid. And we will continue to do our part to ensure fair competition in the European aviation sector.

Thank you.

ITA applies to the U.S. DOT for traffic rights to the United States

ITA – Italia Trasporto Aereo via its US legal firm KMA Zuckert LLC of Washington has applied to US DOT for getting approval to fly to the United States.

ITA wants to fly to from Milan (Malpensa) to New York (JFK) and from Rome (Fiumicino) to Boston, Miami and New York (JFK).

In 2022, the new flag carrier plans to fly from Rome to Los Angeles and Washington (Dulles).
In 2023, it wants to add service from Rome to Chicago (O’Hare) and San Francisco.
The last Alitalia revenue service is planned for October 13, 2021 from New York (JFK) as flight AZ609.
Marco Finelli reporting from Italy.
About the new airline:

ITA – Italia Trasporto Aereo is a company totally owned by the Italian Ministry of Economy and Finance for the exercise of business in the air transport sector. The airline has been active since November 2020.

ITA aims at creating an efficient and innovative air carrier that will become a reference point in providing Italy with quality connectivity with both international destinations, thus boosting tourism and foreign trade, and within the Country, also taking advantage of the train-air integrated mobility. ITA will place the best customer service at the centre of its strategy (through a strong digitization of processes that ensure a best-in-class experience and personalized services), combined with sustainability, in its environmental (new green and technologically advanced aircraft, use of sustainable fuels), social (equality and inclusion for a gender-neutral company) and governance (integration of sustainability into internal strategies and processes) aspects.

ITA will equip itself with a modern and environmental-friendly fleet that will include leading-edge technologies which will optimize efficiency and quality of service and significantly reduce the environmental impact. At the beginning of operations, ITA will operate a fleet of 52 aircraft, including 7 wide-bodies and 45 narrow-bodies aircraft. In 2022 the fleet will rise to 78 aircraft (+26 vs 2021), including 13 wide-bodies (+6 vs 2021) and 65 narrow-bodies (+20 vs 2021). From 2022, new-generation aircraft will gradually join the fleet replacing old technology aircraft. At the end of 2025 the fleet will rise to 105 aircraft (23 wide-bodies and 82 narrow-bodies), with 81 new-generation aircraft (77% of the entire fleet).

ITA will focus its business on the Rome Fiumicino hub and Milan Linate airport where it will position itself as the reference airline for business and leisure traffic. At the beginning of operations, the airline will fly to 45 destinations with 61 routes, growing to 74 destinations and 89 routes by 2025, at the conclusion of the rebalancing process of flights towards the long-haul sector, which is aimed at bridging the connectivity gap of the Country.

Sustainability and digitization are two key elements of the industrial strategy of ITA.

A series of actions, in terms of reducing the environmental impact, promoting creation of an inclusive culture and integrating sustainability into internal strategies and processes will be implemented in order to pursue ambitious ESG objectives that will allow ITA to be the greenest airline in Europe and a gender-less and merit-based air carrier.

ITA will strongly focus on digitization, in fact substantial investments are planned in digital systems and platforms in order to guarantee a quality travel experience to the customer, as a distinctive element of the offer, and develop a data driven company with flexible and lean organization whose foundations are based on the data analysis and understanding, as well as on the value of its human capital.

Thanks to its network, ITA provides full coverage of Italy and offers direct connecting flights to major European capitals, Mediterranean destinations and the fastest growing intercontinental markets for traditional tourism and business.

 

ITALY

Brindisi, Bologna, Bari, Catania, Rome Fiumicino, Florence*, Genoa, Milan Linate, Naples, Palermo, Pescara, Reggio Calabria, Lamezia Terme, Trieste, Turin, Venice and Verona

 

EUROPE, NORTH AFRICA AND MIDDLE EAST

Algeri, Amsterdam, Athens, Barcelona, Belgrade**, Brussels, Cairo, Dusseldorf, Frankfurt, Geneva, London Heathrow, Luxembourg*, Madrid, Malaga*, Malta, Marseille*, Munich, Nice, Paris Charles de Gaulle, Paris Orly, Sofia**, Stuttgart*, Tirana, Tel Aviv, Tunis, Valencia*, Zurich

 

REST OF THE WORLD

Boston, Buenos Aires*, Sao Paulo*, Tokyo Haneda, Washington*, New York, Los Angeles*, Miami

 

*Destinations available from March 2022.
**Destinations available from August 2022.

ITA starts to sell tickets for flights starting on October 15

ITA (Italia Trasporto Aereo) has issued this statement:

Starting on August 26, ITA will start the sales for flights operating from October 15. Beginning of sales follows the achievement of the certifications (Air Operator Certificate and Operating License) that ITA obtained from ENAC (Italian Aviation Authority) on August 18, 2021. The Board of Directors of ITA, chaired by Chairman Alfredo Altavilla, met today and approved to transform the non-binding offer already sent on August 16 to the Extraordinary Administration of Alitalia into a binding offer which includes 52 aircraft, a related number of slots, as well as contracts and complementary assets from the Aviation sector in order to start operations on October 15.

Starting from August 26, ITA will launch a campaign to collect applications for professional figures to be subsequently included in the flight and ground operational areas and in the staff areas. In line with the values and strategy of the airline, which decisively focuses on the digitization of business processes to develop a flexible and lean organization, the process of collecting applications will take place on the website with the assistance of innovative digital platforms. ITA has convened the trade unions on August 25 at 10:30 with the aim of starting the negotiation of new working conditions in line with market practices. Furthermore, ITA is adopting a policy in which all employees will be required to obtain the Green Pass, in line with the anti-Covid procedures and to safeguard the health of employees and customers.

The Chairman of ITA, Alfredo Altavilla, said: “An indispensable condition and our top priority is to complete negotiation with Alitalia under Extraordinary Administration for the sale of the Aviation perimeter as soon as possible. We have confidence in a constructive interaction with the trade unions in order to provide ITA with a new innovative employment contract capable of ensuring structural competitiveness of the airline with competitors.”

The Chief Executive Officer and General Manager of ITA, Fabio Lazzerini, said: “In recent days, with the certifications obtained from ENAC, we have reached an important milestone in the history of ITA. Now we are preparing to achieve another fundamental result: the start of sales. Now we must achieve new and complex goals in view of the launch of operations on October 15 and numerous projects must be completed in order to create an efficient, sustainable, digital airline, capable of facing future challenges with flexibility and in full discontinuity with the past.”

Planned destinations of ITA:

ITALY
Alghero, Brindisi, Bologna, Bari, Cagliari, Catania, Comiso, Rome, Florence *, Genoa, Milan Linate, Naples, Olbia, Palermo, Pescara, Reggio Calabria, Lamezia Terme, Turin, Trieste, Venice and Verona
EUROPE, NORTH AFRICA AND MIDDLE EAST
Malaga *, Algiers, Amsterdam, Athens, Barcelona, ​​Belgrade **, Brussels, Cairo, Paris Charles de Gaulle, Dusseldorf, Frankfurt, Geneva, London Heathrow, Luxembourg *, Madrid, Malta, Marseille *, Munich, Nice, Paris Orly , Sofia **, Stuttgart *, Tirana, Tel Aviv, Tunis, Valencia *, Zurich
REST OF THE WORLD
Boston, Buenos Aires *, Sao Paulo *, Tokyo Haneda, Washington *, New York, Los Angeles *, Miami
* The following destinations will be reachable starting from March 2022
** The following destinations will be reachable starting from August 2022

ITA (the new Alitalia) receives its AOC, will start operations on October 15

ITA – Italia Trasporto Aereo on August 16, 2021 started operating test flights using Airbus A330-202 EI-EJN as the AOC proving aircraft.
The new airline has completed the certification process for obtaining its AOC – Air Operators Certificate and Transport Passengers License.
The new airline will take over the current Alitalia SAI on October 15, 2021.
ITA received “ITY” as the new ICAO code for operations. In the future, ITA will apply for the brand of Alitalia that the commissars intend to sell off with an open competition, as the EU commission dictated for allowing ITA to take off.
ITA cannot buy the current Alitalia frequent flyer program, Millemiglia Loyalty, with 6.1 million members and over 45 billions miles collected from frequent travelers.  The question mark for the future are several:
Network
Rome Fiumicino will be the main focus city for long-haul. Milan Linate will be the main focus city for European flights.
Currently Alitalia is serving only New York JFK and Tokyo Haneda on long-haul.
What will be the routes for ITA?
Fleet
52 jets are the core of start-up fleet, growing to over 80 in the next year with the arrival of new deliveries.
Alliance membership
Currently Alitalia is in the SkyTeam alliance with a code share agreement with Delta Air Lines.
ITA will continue this way and will search for an agreement with Air France – KLM and Virgin Atlantic or switch to Lufthansa, leaving the SkyTeam Alliance and joining the Star Alliance.
This morning the ENAC – Ente Nazionale per l’Aviazione Civile (Italian CAA) issued this statement:
ITA can take off: ENAC issues the air operator certificate and the air transport license to the new national company.
ENAC, the National Civil Aviation Authority, issued today – August 18, 2021, the Air Operator Certificate (AOC) and the Air Transport Operating License to the company ITA (Italy Transport Air).
“ITA can take off – said the President of the National Civil Aviation Authority, State Attorney Pierluigi Di Palma. The hope is that the new national reference company will contribute to the restart of the sector, making a decisive contribution to overcoming the difficulties arising from the pandemic crisis. ENAC will continue in its institutional and technical task to ensure the operational start-up of ITA, ensuring compliance with public interests and the rights of passengers which are essential elements of the air transport business. “
Alessio Quaranta, Director General of ENAC, also points out that “The release of the AOC certifies that the airline has the professional capacity and business organization necessary to ensure the operation of its aircraft in safe conditions. The aircraft operator license constitutes the final provision relating to the legal-administrative and economic-financial, as well as technical-operational checks.
With the possession of the AOC and the aircraft operator license, the company can start the sale of tickets”.
Marco Finelli reporting from Italy.

ITA is doing AOC certification flights with Airbus A330-200 EI-EJN

ITA-Italia Trasporto Aereo, the new Alitalia, has leased Airbus A330-200 EI-EJN from APC Ltd. (Aircraft Purchase Company Ltd.).

The aircraft is being operated on proving flights for the new AOC starting next week.

The airliner is in the Alitalia livery with a ITA sticker.

A second aircraft, an Airbus A320 is due soon.

More from Il Corriere della Sera (in Italian):

https://www.corriere.it/cronache/21_agosto_11/ita-alitalia-ecco-primo-aereo-nuova-compagnia-l-airbus-a330-tintoretto-d32cf658-faa0-11eb-ba5f-da3c10b6af90.shtml

ITA – Italia Trasporto Aereo Shareholders’ meeting approves capital increase of €700 million

The Shareholders’ Meeting of ITA, which met on July 28, approved a capital increase of €700 million, as proposed by the Board of Directors of the company.

This resolution follows the approval, by the Board of Directors on July 15th, of the 2021-2025 Business Plan lines and the completion of the ongoing approval process by the European Commission on the basis of the “Comfort Letter” issued by the Commission on the same July 15th.

The Chairman of ITA, Alfredo Altavilla, said: “Today is another important milestone in the process that will see the start of operations of the new airline on October 15th. With the just approved capital increase, the public shareholder confirms the solidity of the project from a private investor’s point of view. The following step will be the immediate beginning of negotiations with Alitalia under Extraordinary Administration for the acquisition of the “Aviation” sector, pending the tender for the sale of the Alitalia brand that we hope will take place as soon as possible.

More on the new airline:

ITA (Italia Trasporto Aereo) will be operational from October 15, 2021, flying a fleet of 52 aircraft that will grow to 105 by the end of 2025, as envisaged in the 2021-2025 business plan approved by the Board of Directors of the newly established company destined to take over from Alitalia. The plan also provides for the ‘discontinuity’ requested by the European Commission during negotiations with the Italian Government over the past few months. ITA will be able to acquire, through direct negotiation with Alitalia, the assets to manage the flight sector, the so-called ‘aviation’ branch. The Alitalia brand will be sold through a public tender, issued and managed by Alitalia, in which ITA itself will participate, as it believes that the brand is an essential element for the plan. ‘Ground Handling’ and ‘Maintenance’ activities will also be contracted through a public tender.

ITA will initially operate with a fleet of 52 aircraft. By 2022, it will grow to 78 aircraft and, from 2022 onwards, new-generation aircraft will be gradually added to the fleet. By the end of 2025, the number of aircraft will rise to 105. Over the plan period, ITA plans to rely on a single strategic partner for aircraft, and discussions are underway with the main partners. All employees will be hired under a new employment contract. The ‘Aviation’ branch is expected to employ 2.750-2.950 people, rising to 5.550-5.700 by 2025. In the event that ITA is awarded contracts for the ‘Ground Handling’ and ‘Maintenance’ activities, 2.650-2.700 and 1.100-1.250 staff are expected to be employed respectively.

ITA’s plan has been approved, forecasting a turnover that will reach  3.329 million euros in 2025, with an economic result of 209 million euros and an operational break-even to be reached by third quarter 2023.

At first, the airline will fly to 45 destinations with 61 routes, growing to 74 destinations and 89 routes by 2025. As for long-haul routes, ITA will initially provide connections to New York, Tokyo, Boston and Miami, but new routes to São Paulo, Buenos Aires, Washington and Los Angeles are expected to be added in the summer 2022. From Fiumicino (Rome) and Linate (Milan) airports there will be connections to the main EU destinations. During the shareholders’ meeting scheduled for July, it will be decided on an initial capital increase of 700 million euros.

ITA’s executive chairman Alfredo Altavilla stated: “The approval of ITA’s business plan by the European Commission and the confirmation of compliance with the MEOP, which certifies the soundness of the project in terms of private investment by the public shareholder, is an important result that paves the way for the launch of ITA. Now, within 90 days, we should complete the transition leading to the take-off of the first aircraft on 15 October. I would like to express my heartfelt thanks to the Italian Government and our representatives in Brussels for the teamwork that made it possible to achieve this important result after months of negotiations, and which we trust will continue in the months to come”.

The CEO and managing director of ITA, Fabio Lazzerini, said: “I am particularly satisfied with the acknowledgement of the industrial and financial solidity underlying the approval of the Plan. A plan which, starting from the customer and its needs, will place ITA among the best companies in Europe in terms of economic, social and environmental sustainability, while guaranteeing connectivity to businesses, tourists and citizens. I would like to express my sincere thanks to the ITA team for the enthusiastic and total commitment with which they have worked during these challenging months, and to the institutions and stakeholders in the sector (ENAC, ENAV, the airport system) for the openness and trust they are showing us. Now we face the great challenge of launching a successful airline in three months. A challenge to which we will devote all our energy.”