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EU, Italy confirm ITA will replace predecessor Alitalia

written by Isabella Richards | July 16, 2021

The Italian Government and the European Commission have announced that Italia Transporto Aereo (ITA) will officially replace its bankrupt predecessor, Alitalia, as Italy’s flag carrier, with flights due to begin in October.

The long-awaited decision will see flights for ITA begin on 15 October, with Alitalia’s final flight to operate the day before, on 14 October.

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The newly-secured deal allows ITA to avoid taking on the liabilities of its predecessor and be recognised as an entirely new entity.

State-owned Alitalia has been bankrupt since 2017, only surviving through government loans.

ITA said, as a newly-formed state-owned airline, it expected revenue to be above €3.3 billion by 2025, and would reach €209 billion before interest and tax, breaking even by the end of 2023.

“The discussion with the European Commission has permitted to arrive at a constructive and balanced solution that guarantees the necessary discontinuity in respect to European rules,” the industry ministry said.

Now, with approval, ITA can accelerate its operations and begin hiring around 5,000 employees.

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Alitalia operates around 11,000 staff, and between 2,750 and 2,950 will transfer to ITA, as that is all that is permitted through the deal.

“All the persons will be hired with a new work contract that assures greater competitiveness and flexibility compared to other operators in the sector,” ITA noted.

Around four national unions have rejected ITA’s plan from the beginning, and deem its hiring process as unacceptable.

But the ministry states it would “take charge of the social repercussions … activating safeguards to support the workers who will not find a place in the new company.”

Many routes will change, as ITA will only assume 85 per cent of the Alitalia slots at Milan’s Linate Airport, and 43 per cent at Rome’s Fiumicino, according to Reuters.

These include Paris, London, Amsterdam, Brussels and Geneva from both airports.

ITA plans to operate flights to Tokyo, Boston and Miami from Rome, along with New York from Rome and Milan.

The company will operate a fleet of seven wide-body and 45 narrow-body jets initially, and will acquire up to 26 additional aircraft this year.

ITA hopes to see its fleet increase to 105 aircraft by 2025.

A draft decree earlier this year said the Commission declined to comment on Rome’s plan to extend to December the €400 million bridge loan granted to Alitalia.

When it was announced that Alitalia would receive additional financial aid, many industry leaders and politicians were enraged as the continuous funding for a money-losing company seemed illegal.

This caused major investigations, which are still ongoing according to the EU.

The remainder of Alitalia’s assets will be tendered off, and ITA plans to raise capital up to €700 million and bid together with other interested parties to buy assets.

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