Air Italy bids goodbye
Air Italy, the second-largest airline company in Italy after Alitalia was facing a liquidity crisis and seen that it may not survive long. Air Italy’s situation was announced in one of the largest Italian newspapers – Il Corriere Della Sera. No less than 24 hours, Air Italy announced that it would immediately enter voluntary liquidation. It informs the public that until February 25th, flights would be carried out by other carriers like Wamos Air. All other tickets that fall beyond the given date would automatically be refunded. For its employees, they will receive their severance packages as per what is written in their contracts. It’s all the end of Air Italy.
To give you an idea, Air Italy is a joint venture between AKFED and the holding company for the Aga Khan’s for-profit ventures, and also Qatar Airways. They have an ambitious plan to grow this carrier into a major player in the so-called ultra-competitive European commercial aviation market. Unfortunately, it proved to be a financial nightmare. Giving you some figures, this airline lost €164 million and €198 million in 2018 and 2019 respectively. It was indeed a huge loss for an airline company who only have 13 fleets left. When Air Italy ceased operations, all of its long-range fleets had been reduced. Only four Airbus A330 remains which are leased from Qatar Airways.
AlixPartners, a bankruptcy and turnaround advisory firm proposed a tentative recovery plan for Air Italy however, it required capital outlays of at least €500 million over the succeeding two years which is far more than AKFED was ready to stomach. Qatar Airways is blaming its partners for pulling the plug on this partnership. Over the past three months, it already approved cutting several unprofitable long-range routes that fly chiefly to South Asia and also took back the A330.
Now, Qatar Airways wants RwandAir and is now negotiating with the Rwandan government to purchase a large stake in the country’s flag carrier. On the other hand, South African Airways gets another bailout. This is worth about $240 million and is said to be carried out by the Developmental Bank of South Africa. Lastly, a Brazilian bus company, Itapemirin Group wants to become an airline and called Ita. It supposed to have already ordered at least 35 unspecified Embraer regional airliners but still not clear if it is directly or just through leasing companies like Guggenheim Partners and GECAS. It may start its operation in late 2021 or early 2022.
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