Free from debt, Alitalia is ready to fly again

Italy’s new state-backed airline, Italia Trasporto Aereo, will seek to buy the Alitalia name in time for its start of service in mid-October, according to people familiar with the matter.

A market-price auction of the brand was outlined in a decision released Friday by the European Commission.

It’s one of the measures required in order to consider ITA a separate entity from the 74-year-old Alitalia, which is being wound down after losing money for decades. The sale of the iconic name could take place as soon as next week, said the people, who asked not to be named because the plans aren’t public.

Transfering control of the brand to ITA has been a key goal of the government in Rome as it seeks to retain Alitalia’s identity while giving the new, smaller airline a fresh start.

But the European Union’s antitrust chief, Margrethe Vestager, insisted that the economic interests of the new carrier be separated from its deeply indebted predecessor. The sides wrangled for months over matters including routes, staffing and equipment.

The Alitalia brand dates back to 1947, when a Fiat G-12 plane took off from from Turin and landed at Sicily’s Catania airport after a stop in Rome.

It “will be sold in an open, transparent, non-discriminatory and unconditional tender to the highest bidder,” the EU directed Friday in a statement. “ITA will be able to bid in competition with other bidders.”

A quick sale could favor ITA, which inherits planes already outfitted with Alitalia’s green, white and red livery.

The short time frame limits the time potential rivals will have to assess any competing bids for the brand. The new airline has ready access to cash – Italy can inject €1.35 billion (US$1.6 billion) into it over the next three years.

A spokesman for ITA declined to comment.

ITA will start operations on October 15. Its chairman, former Fiat Chrysler executive Alfredo Altavilla, plans a much leaner company with no more than 2,800 workers focused on the most profitable routes.

ITA won’t be allowed to purchase Alitalia’s loyalty program MilleMiglia, and will be able to take over only limited parts of the old company’s ground handling and maintenance businesses.

But the new company won’t be responsible for Alitalia’s debt, including €900 million of Italian subsidies that were ruled illegal.

Italy’s national airline collapsed in 2017 after failing to make a profit for years, succumbing to competition from more-efficient low-cost carriers like Ryanair.

The Irish carrier has criticized state rescues of Alitalia and other national favorites as unfair while coronavirus-related travel restrictions slam the entire industry.

“We have two fixed points on Alitalia,” Deputy Finance Minister Laura Castelli said Friday.

“On the one hand, ensure the start-up of the new company, in compliance with the commitments made with the European Commission, and on the other, ensure that all Alitalia employees have a path of active policies, aimed at reintegrating these professionals into the labor market.”

Also read: Will Alitalia’s successor ITA join the SkyTeam alliance?

Bloomberg News

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