Alitalia saved by the Government and reborn as ITA Airways

[ticketbuyer]

Run this article from today's Il Sole 24 Ore through Google Translate to see the latest on ITA
https://amp24.ilsole24ore.com/pagina/AEnOUBXD
It looks like the fat lady is ready to sing

[sn26567]

Jörg Eberhart is to become ITA Airways boss

The Italian national airline ITA Airways has cleared the way for new management. Things are looking good for former Air Dolomiti boss Jörg Eberhart. The restart of ITA with the participation of Lufthansa is thus taking shape. Jörg Eberhart is currently Head of Strategy at Lufthansa. He has been selected for the CEO post of ITA Airways.

[ticketbuyer]

From AVIONEWS
We are 24 hours away from the Brussels green light for the ITA-Lufthansa marriage and the two newlyweds are preparing to tie the knot. July 3 is set as the date on which the European Competition Commission, led by Margrethe Vestager, should officially authorize the operation. In detail, the German Group will purchase 41% of the Italian national airline for 350 million euros.

The green light for the wedding from the European Commission came after Lufthansa and ITA gave up some long-haul operations between Rome-Fiumicino and North America and a package of airport slots (between 15 and 17) at the Milan-Linate airport. These take-off and landing rights will be put back on the market with the aim of not creating dominant positions or monopolies on some routes. The slots will be assigned to the best offering airlines: low-cost easyJet, Ryanair and Wizz Air.

The ITA-Lufthansa agreement provides that the Germans will subsequently acquire 90% of the Italian flag carrier, through a total investment estimated at 829 million euros. Sticking to the question of money, a further 240 million euros of financing is on the way for the purchase of owned aircraft: the goal is to have a fleet of 96 aircraft by the end of 2024.

[sn26567]

We are 24 hours away from the Brussels green light for the ITA-Lufthansa marriage and the two newlyweds are preparing to tie the knot. July 3 is set as the date on which the European Competition Commission, led by Margrethe Vestager, should officially authorize the operation. In detail, the German Group will purchase 41% of the Italian national airline for 350 million euros.

And here is the green light from the Commission: https://www.aviation24.be/airlines/luft ... onditions/

[TimTam]

Poor ITA and poor SN.

[AKLAndrew]

Poor ITA and poor SN.

I'm trying to understand your post. Would you rather that both airlines had ceased to exist and all their employees ended up unemployed? If I've misunderstood your post, please feel free to clarify.

[BrightCedars]

I see potential for some cooperation and codeshare flights between SN and AZ, and of course with others in the LH group, at least on the European scene. I also guess this means AZ will take SK's place in Star Alliance and perhaps join the transatlantic deal with AC and UA.

The LH group belt now goes from BRU to ROM via FRA, MUC, GVA, ZRH, VIE and MIL. Impressive!

[TimTam]

Poor ITA and poor SN.

I'm trying to understand your post. Would you rather that both airlines had ceased to exist and all their employees ended up unemployed? If I've misunderstood your post, please feel free to clarify.

OK, I will clarify at the risk of being told (euphemism) that I am wrong (to put it short).

Aegean Airlines (good financial results), LOT (same), TAP (a very small profit), ITA (a small loss). Aegean and Lot, afaik, are not interested in belong to a major group. Correct me if I am wrong. Small is beautiful and can be profitable without being under the yoke of a dominant airline.
Tap and ITA are of a different opinion. TP might be acquired by a major group (LH now seems out of the question). If that is what they want, let's see what that will mean if it is AF-KL, which to me seems the only option left after the acquisition of Air Europa by IAG.

For ITA, I am afraid they are falling into the same trap as SN shareholders :

"The capital contribution thus directly benefits the company. As part of the agreement, the MEF has also committed to a capital increase of EUR 250m into ITA. In addition, the MEF and Lufthansa agreed on options to enable a potential acquisition of the remaining shares by Lufthansa at a later date. The purchase price for the remaining shares will be based on the business development of ITA Airways."


However, the difference between SN and ITA, is that ITA is the Big Boss's pick, whereas SN is an unwanted inheritance.

Because of this, SN will probably be further "downgraded" in the Big Boss's priorities in favor of ITA.

One day, ITA will realize that they will not only, but mainly serve as a feeder airline to LH in FRA and MUC, and to perhaps to a slightly smaller extent to feeding LX at ZRH. I seriously doubt there will be anything substantial in it for SN (and OS).

obe will say you have to see it from the Group's point of view. OK, I can understand that. However, I cannot refrain from seeing what'is in for, mainly, ITA and SN. "SN would be dead without SN". Big Boss keeps it just on a life line. One wonders why. Please, clarify. Thanks.

[oldblueeyes]

There is no risk to be wrong, but your "analysis" ignores the reality.

Your level of assumption is far above basic information.

Aegean has a short haul profile and are even stock exchange listed, a family business. The bunch of their business is leisure, thus not fitting into a hub model which they to not aim at all.

TAP -unsuccesfull privatized, re-nationalized, now looking to be re-privatized.

LOT - Polish hubris , they want to be a consolidator themselves. May work, may not. "Separating" within the Star Alliance went well for Turkish and wrong for SAS.

Now coming to ITA
- the "feeder" bullshit - if you would be an intelligent guy you could read and understand some annual reports of the companies you are talking to - Lufthansa has since 2 decades a feeder in Italy, called Dolomiti
- same applies to Swiss /Helvetic
- if you would know a little bit the Italian market, you may have realized that the North of Italy is anyhow a kind of extended Lufthansa Home Market - there is no hub in Northern Italy, where population density and incomes are high
- the Italian govenrnment is not looking for a "maximal price" as basically they are selling a new set up - there are almost no assets as the fleet is leased

And now let's come to what ITA would get:
- access to the LH ventures - better for them as it was under AF/KLM and Etihad
- the product is already defined ( cabin of the 330 neos) one level below LH and the long haul fleet is in Rome - with around 30 aircraft size does matter and they would come as natural number 3 brand in the group
- likely an expanded hub - Italy itsefl is strong in the hands of LCC's, so they need a strong arm enabling them to gain market share in FCO; on top Dolomiti may execute in the future feeder flights for them as well
- friendly partners - the initial acquisition plan was LH together with MSC, targeting as well leisure traffic towards Italy - in aJV the feeding markets towards Rome are totally different
- LH Group traffic in markets where rights are saturated and the LH group needs new rights

What would other loose?
- it is selfunderstanding that ITA would build up their network as well - they may fish partially in uncapitalized routes served today other ways, but they would "eat" as well transfer pax from other members of the group
- niche markets may be served by them - the aim is to have a Souther European hub, thus some Middle East and African destinations may be better served by them

And i am sure that with this wave of consolidation the topic is not closed and all 3 big players would look afterwards to furthe rconsolidate the P2P market.

[AKLAndrew]

Poor ITA and poor SN.

I'm trying to understand your post. Would you rather that both airlines had ceased to exist and all their employees ended up unemployed? If I've misunderstood your post, please feel free to clarify.

OK, I will clarify at the risk of being told (euphemism) that I am wrong (to put it short).

Aegean Airlines (good financial results), LOT (same), TAP (a very small profit), ITA (a small loss). Aegean and Lot, afaik, are not interested in belong to a major group. Correct me if I am wrong. Small is beautiful and can be profitable without being under the yoke of a dominant airline.
Tap and ITA are of a different opinion. TP might be acquired by a major group (LH now seems out of the question). If that is what they want, let's see what that will mean if it is AF-KL, which to me seems the only option left after the acquisition of Air Europa by IAG.

For ITA, I am afraid they are falling into the same trap as SN shareholders :

"The capital contribution thus directly benefits the company. As part of the agreement, the MEF has also committed to a capital increase of EUR 250m into ITA. In addition, the MEF and Lufthansa agreed on options to enable a potential acquisition of the remaining shares by Lufthansa at a later date. The purchase price for the remaining shares will be based on the business development of ITA Airways."


However, the difference between SN and ITA, is that ITA is the Big Boss's pick, whereas SN is an unwanted inheritance.

Because of this, SN will probably be further "downgraded" in the Big Boss's priorities in favor of ITA.

One day, ITA will realize that they will not only, but mainly serve as a feeder airline to LH in FRA and MUC, and to perhaps to a slightly smaller extent to feeding LX at ZRH. I seriously doubt there will be anything substantial in it for SN (and OS).

obe will say you have to see it from the Group's point of view. OK, I can understand that. However, I cannot refrain from seeing what'is in for, mainly, ITA and SN. "SN would be dead without SN". Big Boss keeps it just on a life line. One wonders why. Please, clarify. Thanks.

Thank you Timtam for clarifying what you meant. In return, I'll clarify that I don't think either Brussels Airlines or ITA would've had a long term future as stand alone airlines, so for me it was LH group ( or AF/KL , or IAG ) or disappear within a few years leaving lots of people out of jobs.

I guess we'll have to agree to disagree, but at least now I understand your post from the other day

[oldblueeyes]

Not difficult to relay on data available to the public.

https://investor-relations.lufthansagro ... ebsite.pdf

[Atlantis]

As a consequence, SN will stop flying to Linate and concentrate on Malpensa.
One of the first new routes start up from Linate to BRU is by Easyjet.

[Miqvell]

As a consequence, SN will stop flying to Linate and concentrate on Malpensa.
One of the first new routes start up from Linate to BRU is by Easyjet.

"One of the first new routes", you mean another airline could also add LIN-BRU ? (I know that Volotea was also rumored to start it)

[Atlantis]

As a consequence, SN will stop flying to Linate and concentrate on Malpensa.
One of the first new routes start up from Linate to BRU is by Easyjet.

"One of the first new routes", you mean another airline could also add LIN-BRU ? (I know that Volotea was also rumored to start it)

I mean after SN will close the route, Easyjet will open this route to BRU. From LIN, BRU is on the top of their list

[fcw]

As a consequence, SN will stop flying to Linate and concentrate on Malpensa.

And here troll TiTa has a point: SN slots, on one of their most profitable European routes, are being sacrificed to facilitate the takeover of ATI by LH!
Probably other group members are making even more money on LIN-routes, but LH can’t take profitable route away whilst demanding a certain level of profitability at the same time.

[TimTam]

As a consequence, SN will stop flying to Linate and concentrate on Malpensa.

And here troll TiTa has a point: SN slots, on one of their most profitable European routes, are being sacrificed to facilitate the takeover of ATI by LH!
Probably other group members are making even more money on LIN-routes, but LH can’t take profitable route away whilst demanding a certain level of profitability at the same time.

[TimTam]

Troll TiTa ? Pardon me ?

[oldblueeyes]

As a consequence, SN will stop flying to Linate and concentrate on Malpensa.

And here troll TiTa has a point: SN slots, on one of their most profitable European routes, are being sacrificed to facilitate the takeover of ATI by LH!
Probably other group members are making even more money on LIN-routes, but LH can’t take profitable route away whilst demanding a certain level of profitability at the same time.

Let's look to the big picture.

The comission asked to reduce the combined market share from 60% to 50% and increase competition on routes where there would be a dominance.

As of today, ITA and SN are flying each 3 times per day to LIN.

If some slots are gone, nobody would hide to ramp up to A321 and get a large portion of the seats back.

In the same group, with codeshares on the routes, with central revenue management it really doesn't matter - SN would get it's 50% on what is earned on LIN.

But - there is a but and you need to accept it. ITA would become the more important brand.

So it makes perfectly sense to keep both ITA and SN strong from their own bases. The alternative would be a Eurowings base in MXP and letting them operate to BRU - and this may come one day, when LH would cover Italy as home market for decentral traffic as well.

[Atlantis]

As a consequence, SN will stop flying to Linate and concentrate on Malpensa.

And here troll TiTa has a point: SN slots, on one of their most profitable European routes, are being sacrificed to facilitate the takeover of ATI by LH!
Probably other group members are making even more money on LIN-routes, but LH can’t take profitable route away whilst demanding a certain level of profitability at the same time.

Let's look to the big picture.

The comission asked to reduce the combined market share from 60% to 50% and increase competition on routes where there would be a dominance.

As of today, ITA and SN are flying each 3 times per day to LIN.

If some slots are gone, nobody would hide to ramp up to A321 and get a large portion of the seats back.

In the same group, with codeshares on the routes, with central revenue management it really doesn't matter - SN would get it's 50% on what is earned on LIN.

But - there is a but and you need to accept it. ITA would become the more important brand.

So it makes perfectly sense to keep both ITA and SN strong from their own bases. The alternative would be a Eurowings base in MXP and letting them operate to BRU - and this may come one day, when LH would cover Italy as home market for decentral traffic as well.

If you want to open a Eurowings base in MXP then you will compete against your own brands. Why SN should give up all the time. How you explain by saying: "keep SN strong from their own bases" if part by part they have to give up routes? They same with Scandinavia, also there they were forced to give up slots. Now you have to fly via FRA.

The pax, business people have lack if it is central revenue management. They want to fly direct. If even in Europe you cannot fly direct anymore, then you can start yourself questions and its not good

[oldblueeyes]

You lack logic.

LIN base flies to BRU. BRU base flies to MXP.
Code shares on everything.

Win-Win.

Stop thinking on what's paint on the airplane, this doesn't matter.