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RIP Alitalia: Doomed to Fail

Farewell, Failed Flag

MATTHEW FEARGRIEVE discusses the inevitable demise of Italy’s flag carrier It will come as small surprise to readers of this blog that Alitalia is to shutter most of its operations, a mere two years after its ambitious rebranding as Air Italy. Like so many aspects of big business and industry in Italy, the joint venture behind Air Italy was at best questionable in its viability and, at worse, susceptible to suggestions of corruption at the highest levels. The JV is owned 51/49 between the Aga Khan and Qatar Airways. The rationale for its inception in 2017, following Alitalia’s inevitable liquidation, was ostensibly to replace it as Italy’s main flag carrier. The venture was inauspicious from the start, its predecessor having recorded a profit on only one occasion – and that was in 1946. Like so many of Italy’s institutions, Alitalia had been propped up for decades on tax-funded state subsidies, whilst politicians and management got rich on contracts handed out to their cronies and, of course, to the mafia. It was, like so many enterprises in Italy, exploited for all it was worth until it collapsed. Its successor Air Italy lost over €360m (US$415m) in just two years, crippled by the Alitalia curse and unable to compete with low-cost carriers like Ryanair. The grounding of Boeing’s 737 MAX (of which Air Italy owned three) was a major blow. Finally, the JV’s shareholders withdrew funding, having seen the writing on the wall. Qatar Airways has issued a statement in which it says it is “no longer interested in investing in Air Italy or in any other air transport project in Italy”. The truth, one suspects, is that Qatar and its backers received questionable inducements from Alitalia bosses to encourage their investment in Air Italy, and that both parties have done well from three years of funding by Italian taxpayers. Similarly for the Aga Khan, for whom the price of exit will be negligible. Like Alitalia, Air Italy was a victim – or rather, a vessel – of state corruption in Italy. It was doomed from the start. Matthew Feargrieve is an aviation investment consultant. You can read more of his blogs here:

#AirItaly #Alitalia

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