After lengthy political infighting, the Italian government has agreed to incorporate a new company which will house the assets of Alitalia (AZ, Rome Fiumicino), a crucial step on the road to relaunching the struggling flag carrier as a wholly state-owned enterprise. The government is also plotting the renewal of the airline's widebody fleet but first has to clear the process with the European Commission.

Late on Friday, October 9, the economy, industry (economic development), transport, and labour ministers signed a decree setting up the new company, local media reported. The European Commission will now have to approve the plan.

“Italy’s new national airline was born today,” Transport Minister Paola De Micheli said after the decree was signed. “It is a large industrial operation at the service of the country, in support of the competitiveness of our companies and for the relaunch of Italian tourism.”

She elaborated in a Facebook post that the joint-stock company would be called Italia Trasporti Aereo, or Alitalia Ita. “It will be ITAliana because it will have to bring Italy to the world,” she said.

“The newco represents the first step towards establishing a quality carrier capable of competing on the international market. We have laid the foundations for the relaunch of Italian air transport," Roberto Gualtieri, the economy minister, declared.

The ministers also formally appointed Francesco Caio, an executive with a background in telecoms and banking, as the new company’s president and Fabio Lazzerini, Alitalia’s chief business officer and a former general manager of Emirates (EK, Dubai Int'l) in Italy, as chief executive. The other directors on the board were named as Lelio Fornabaio, Alessandra Fratini, Simonetta Giordani, Cristina Girelli, Silvio Martuccelli, Frances Vyvyen Ouseley, and Angelo Piazza.

The ministers’ approval came two days after Alitalia’s state-appointed administrator, Giuseppe Leogrande, urged the government to rush to nationalise the carrier, telling a session of the parliament that a newco is necessary to prevent bankruptcy. Rome has earmarked EUR3 billion euros (USD3.5 billion) to inject into the new company, but political wrangling over board appointments slowed the plan, sources told Reuters.

Leogrande has requested that temporary layoffs for almost 7,000 Alitalia staff be extended from the end of this month to September 2021. He also asked for an additional EUR150 million (USD177 million) to keep the airline running over the coming months in addition to EUR200 million (USD236 million) received in September.

“As of the end of September, the carrier had EUR260 million [USD307 million] in cash,” he told the parliament.

Meanwhile, in Brussels, European Union competition chief Margrethe Vestager said on October 7 that the European Commission would soon decide on whether Alitalia will have to pay back millions in state aid.

As previously reported, Brussels has been investigating a EUR900 million (USD1.06 billion) bridge loan Italy gave to Alitalia in 2017, which has not been paid back, and another EUR400 million (USD472 million) at the start of this year. Italy's Senate approved the latter, which had to be repaid with interest “within six months of disbursement”, on January 29.

“A decision is not too far in the calendar because we have worked on this case a lot,” Vestager said during a press conference, according to Reuters.

In related news, Alitalia’s B777-300(ER) EI-WLA (msn 35783) has become an all-cargo aircraft, with the interiors removed except for the galley and toilets. The airline has only one aircraft of the type, according to the ch-aviation fleets advanced module. Since October 1, it has been deployed on flights between Rome Fiumicino and Delhi Int'l, Mumbai Int'l, New York JFK, and Frankfurt Int'l, ch-aviation analysis of Flightradar24 ADS-B data shows.

It joins B777-200(ER) EI-ISD (msn 32860) as a makeshift freighter conversion. The -200ER has flown to the same destinations since July 3, as well as Boston. Alitalia currently operates eleven B777-200(ER)s.

On September 10, in a Transport Commission hearing in the Chamber of Deputies on Alitalia’s development prospects, Lazzerini revealed that new long-range aircraft for the carrier’s renewed fleet would be introduced into the fleet by 2022.

“Our positioning must necessarily be in the premium market segment. If you are not a low-cost carrier, betting on low fares means commercial suicide. [...] Costs must be the obsession of the management of the newco because efficiency is fundamental, but not to be pursued on the grounds of low prices,” he explained.

On the long-range aircraft, he said that “the first will enter in 2022. In this market segment, in the absence of competition from low cost, there are enormous prospects. Consolidation of short- and medium-haul is also expected for Rome Fiumicino, otherwise the long-haul will not hold up.”