Lufthansa-ITA Airways Deal Plan: How Italy Could Unload Alitalia … – Bloomberg

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Alitalia officially ceased operations in late 2021, when it was reborn as ITA.
Alberto Brambilla,
Chiara Albanese and
William Wilkes
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When Italy’s national airline Alitalia stopped flying in 2021 after decades of losses and numerous brushes with bankruptcy, it was the end of an era. The green, red and white-striped flag carrier favored by popes and glitterati like Sophia Loren was replaced by state-backed ITA Airways, with a fraction of Alitalia’s fleet and staff and a simplified network. Competing with budget carriers in a crowded market — and amid a global pandemic — proved tough, however. Despite a forecast for years of continued losses for ITA, Italy’s new government says it’s finally succeeded where others have failed: It’s found a buyer, Deutsche Lufthansa AG. Yet to be seen is what changes the German behemoth has in mind, whether ITA will retain any Italian flair, and if Rome will really cede control.
The company began flying just after World War II in 1947 under state ownership, with four G-12 airplanes built by Fiat and rented from the Italian Air Force, according to a history in Boeing’s Aero magazine. Pope Paul VI was the first of many popes who flew it around the world. While the company always struggled to make a profit, the real decline started in the late 1990s, when deregulation led to the arrival of low-cost competitors. Alitalia failed to either scale up its lucrative long-haul network or pare down like a budget carrier. As a result it lost market share both in domestic and international traffic to rivals. Successive governments failed to find a long-term solution or buyer for Alitalia, leading to bankruptcy in 2008. Air France became Alitalia’s biggest shareholder after buying a 25% stake for €323 million ($349 million today) in 2009, only to see most of its investment wiped out. Etihad Airways PJSC tried its luck a few years later with a 49% stake in Alitalia to funnel more passengers through its Gulf hub, but that plan, too, fell through. Alitalia filed for bankruptcy again in 2017. The brand officially ceased operations in late 2021, when it was reborn as ITA. It operated only 52 aircraft, down from about 160 Alitalia had in the mid-1990s. According to its own business plan, ITA didn’t expect to earn a profit before 2024. Then-Prime Minister Mario Draghi put it up for sale again in February.

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