Italian full-service carriers established by the local government have become synonymous with a bumpy business journey, but the latest iteration of the airline ITA Airways has indicated that it should earn more revenue than expected by the year’s end. Still, the Italian government finalized the sale conditions of the ever-troubled carrier, as the newly-elected lawmakers were keen to get the airline’s debts off the country’s books.
“We expect passenger revenues in 2022 to exceed the value estimated in the budget, considering the reduction in the offered capacity versus forecasts due to the geopolitical context,” said Fabio Maria Lazzerini, the Chief Executive Officer and General Director of ITA Airways. The statement came alongside the airline’s announcement of new destinations from Rome Fiumicino International Airport (FCO) to Washington Dulles International Airport (IAD) and San Francisco International Airport (SFO) in the United States (US). The flights will be operated by ITA’s Airbus A330 and Airbus A350 aircraft respectively.
According to Lazzerini, the executive who has been leading the airline since its inception in November 2021, the latest expansion of ITA Airways’ long-haul network is “confirmation that to achieve our goals it is necessary to focus on long-haul connections”.
The CEO did not indicate whether ITA Airways would finish the year profitably, however. Reports have previously indicated that the airline is bleeding cash and that it had little time remaining before another bankruptcy would overshadow the government’s attempts to establish a successful airline that could be reasonably successful.
Finalizing sale of ITA Airways
Nevertheless, two consortiums entered the race to either fully acquire or purchase a stake in ITA Airways. On one side, there was Delta Air Lines with Air-France KLM, bolstered by the investment management firm Certares. On the other, Lufthansa had joined forces with the shipping company MSC.
However, in October 2022, as the sale process dragged on, the Delta-AF-KLM-Certares consortium dropped out. The following month, MSC left Lufthansa to deal with the sale by itself. The Italian government has since been exploring options to add the Ferrovie dello Stato Italiane (Italian Railways of the State, the national railway operator) into the bid.
The Germany-based airline group was not deterred from acquiring ITA Airways, though. In an interview with Die Zeit, Carsten Spohr, CEO and Chairman of Lufthansa, said: “Italy is an economically strong and attractive holiday destination.” Local media reports also indicated that Spohr and ITA Airways Chairman Antonino Turrichi met in early December 2022.
In a move to make the acquisition even more attractive, the Italian government passed a ruling on December 21, 2022 to allow potential buyers the option to acquire an initial minority stake in ITA. The move would allow interested parties to save on financial resources in an inflationary economic environment. At the same time, the local lawmakers’ decree included the condition that only an airline group can acquire a majority stake in ITA Airways, ruling out any possible attempts by investment funds to privatize the Italian flag carrier.
Previous reports indicated that the Italian company is valued at between €450 and €500 million ($477 and $530 million), with the airline still on track to grow its fleet of aircraft from 66 to 96 by the end of 2023. As part of the deal with the European Commission (EC), though, the local government is running out of wiggle room to inject more funds into ITA Airways. The deal with the EC included a provision that they could provide as much as €1.3 billion ($1.4 billion), and as of November 2022 – the latest cash injection – they crossed the €1.1 billion ($1.1 billion) mark.