Updated: IG (Air Italy) Ending Operations

ugobeck · Mon Feb 10, 2020 11:42 pm

Such possible outcome has been put forward by the most respected financial newspaper in Italy, Il Sole 24 Ore (in Italian: https://www.ilsole24ore.com/art/air-ita ... e-ACb6iZIB). QR has a 49% stake in IG

LHUSA · Tue Feb 11, 2020 12:31 am

Care to provide a summary for those of us who don't speak Italian?

cirrusdragoon · Tue Feb 11, 2020 12:40 am

LHUSA wrote:
Care to provide a summary for those of us who don't speak Italian?

Just use google translate

DELTA777 · Tue Feb 11, 2020 12:46 am

It appears Accra and Lagos have been canceled with little notice and MXP-JFK is canceled tomorrow. Also, there is word that the shareholder meeting has been moved from Feb. 18 to tomorrow (Feb. 11). It would be a shame to see Air Italy close, but not a surprise.

CALMSP · Tue Feb 11, 2020 1:10 am

there is no way IG would close. The almighty al Baker is behind it!

filipinoavgeek · Tue Feb 11, 2020 1:21 am

The timing of this news sounds really weird considering Simple Flying just published an article about Air Italy and their expansion just a couple of days ago (https://simpleflying.com/what-happened- ... xpansion/; I hope linking to this is allowed, please inform me if it isn't).

With that said, if it really is their end, I'm surprised that they'd die so soon considering their big plans. It makes me fear for the future of startups like Breeze, Starlux, or Bamboo Airways if they remain too ambitious for their own good.

aemoreira1981 · Tue Feb 11, 2020 1:30 am

filipinoavgeek wrote:
The timing of this news sounds really weird considering Simple Flying just published an article about Air Italy and their expansion just a couple of days ago (https://simpleflying.com/what-happened- ... xpansion/; I hope linking to this is allowed, please inform me if it isn't).

With that said, if it really is their end, I'm surprised that they'd die so soon considering their big plans. It makes me fear for the future of startups like Breeze, Starlux, or Bamboo Airways if they remain too ambitious for their own good.

At least Breeze and Starlux have/are being managed by people with aviation experience. Breeze's founder, David Neeleman, co-founded or founded four airlines, 3 of which (WS, B6, and AD) are flying and the fourth (KN) acquired by WN. JX was founded by a former member of Evergreen Group after he was ousted from BR in a boardroom coup (JX is his revenge; however, Chang Kuo-wei did his homework and after 3 years, the airline took to the air a few weeks ago with the A21N). That said, I can't see Breeze remaining independent for long; I could see B6 buying them to go truly national.

AAB, however, is not a true airline guy. Neeleman and Chang are. Also, JX's entry into the market was fortuitous as without JX, Taiwan would have been left with an effective duopoly of CI and BR (and subsidiaries) (JX being announced just before GE shut down, and beginning operations just after FE shut down for good).

juliuswong · Tue Feb 11, 2020 1:40 am

It seems closure is imminent for IG. https://www.corriere.it/cronache/20_feb ... resh_ce-cp

Cointrin330 · Tue Feb 11, 2020 1:44 am

And yet, Alitalia flies on. Seriously, not surprising. The MAX grounding, the lack of meaningful feed, Malpensa's considerable distance from Milan, and the overlap in the majority of the markets they serve would seem to indicate the great Air Italy experiment has been a failure.

filipinoavgeek · Tue Feb 11, 2020 1:54 am

So basically what I understand from the sources is that the issue is that Qatar cannot own more than 49% of the airline and thus can't invest more?

MIflyer12 · Tue Feb 11, 2020 2:06 am

They could loan it cash. Their ownership is limited, however.

SpectralK · Tue Feb 11, 2020 2:19 am

filipinoavgeek wrote:
So basically what I understand from the sources is that the issue is that Qatar cannot own more than 49% of the airline and thus can't invest more?

That seems to be it, and the "Italian" majority owner (really Aga Khan via an Italian shell company) is unable/unwilling to invest more for whatever reason. They need the funds because their rapid expansion plans came with a high amount of debt, and most of that debt paid for 737MAXs that are stuck on the ground. So they're stuck with a bunch of debt they can't pay, for planes they can't use.

edealinfo · Tue Feb 11, 2020 3:10 am

SpectralK wrote:
filipinoavgeek wrote:
So basically what I understand from the sources is that the issue is that Qatar cannot own more than 49% of the airline and thus can't invest more?

That seems to be it, and the "Italian" majority owner (really Aga Khan via an Italian shell company) is unable/unwilling to invest more for whatever reason. They need the funds because their rapid expansion plans came with a high amount of debt, and most of that debt paid for 737MAXs that are stuck on the ground. So they're stuck with a bunch of debt they can't pay, for planes they can't use.

Bot don't they get compensation for the grounded 737MAX? Maybe they will sue Boeing for their total collapse?

edealinfo · Tue Feb 11, 2020 3:15 am

Al Baker is smart to pull the plug on this investment. However, things Qatar has touched also seem to be jinxed. For instance, they bought into Cathay Pacific....

zkojq · Tue Feb 11, 2020 4:49 am

Does this mean the end of Qatar's 737MAX order? IG was the sole intended recipient...

VSMUT · Tue Feb 11, 2020 5:13 am

edealinfo wrote:
Al Baker is smart to pull the plug on this investment. However, things Qatar has touched also seem to be jinxed. For instance, they bought into Cathay Pacific....

Sure you aren't confusing them with Etihad?

Qatar has investments in IAG, Cathay, LATAM and China Southern. They also tried investing in AA at one point. Certainly not ailing and dying airlines.

Waterbomber2 · Tue Feb 11, 2020 5:19 am

If confirmed, I hate to say it, but I was right and predicted this failure over 3 years ago when they were announcing big expansion plans.

These are my posts from 2 years ago, most people disagreed with me:

Waterbomber wrote:
A fleet of 20 new or nearly new B789's sounds promising but IMO it will never happen.
It sounds like some of the promises that EY made when they took over AZ.
Just read through the PR in 2014... it s almost exactly copy paste except that AAB dreams bigger.

I also don't see all those MAX's delivered to AIT. The mere fact that they want to use brand new high capital cost aircraft for a highly seasonal market proves that they don't know what they're doing.

Also, since AAB is such an outspoken critic, I would say that the livery is wrong. More specifically, the fluo green is wrong.

Also, there's nothing Italian about Air Italy since its entire shareholding is in foreign hands even on paper. Makes you wonder about traffic rights to/from Italy.
So no, it cant be an Italian flag carrier.

I'll give this operation 3 years max.

Waterbomber wrote:
AK IV must have citizenships in 20 countries.
UK, Canada, France, Switzerland, etc... Never heard that he has an Italian citizenship.
The question is where does AKFED gets its funding from. From which countries does the money invested in Air Italy come from? Certainly not from within the EU.
IMO competing airlines should ask the EU to investigate.

Listen, I'm not against this airline and its development. Actually quite happy if it happens. But this song has been sung many many times before and it has always ended in a false note.

AAB and the sheiks are drooling at the prospects of building an airline in Italy. The problem is that Italy is a much more difficult market than they can imagine. It' s a market that eats at your spirits bit by bit.
Eventually they'll get tired of writing checks and see no ROI, and crawl back to Olbia where they need to keep an operation for the Costa Smeralda Inc. that Qatar took over from AKFED.

Italy needs all these subsidised and babysitted projects to stop distorting the market and let the free market take care of supply and demand.
This includes Ryanair who was first allowed to chase everyone away with subsidised low fares and is now charging higher than legacy fares in the high season on those same routes.

Go ahead, try to book EIN-AHO over the summer. 500 EUR return, no luggage allowance and if you want to drink something you can buy it on board. Ah and dont mind the wait for your carry on which now HAS tobe checked.

A Romanian airline, Blue Air, is getting 8 digit subsidies to operate domestic continuita territoriale between AHO and FCO. Empty B737's flying back and forth, except for the summer season and the holiday periods.

I wish Air Italy good luck, they will fail for sure, but I would love to be proven wrong.

viewtopic.php?t=1386503&start=50

Eirules · Tue Feb 11, 2020 5:54 am

Is collapsing the airline QR’s way of getting out of a MAX order they now realise is cursed?

runway23 · Tue Feb 11, 2020 10:29 am

Eirules wrote:
Is collapsing the airline QR’s way of getting out of a MAX order they now realise is cursed?

AAB has enough muscle to reject the 737MAX order without bankrupting Air Italy.

The end of this airline is probably just a realization that competitive forces are too strong.

Short-haul they are cornered by easyJet/Ryanair at MXP. Medium/long-haul they are getting squeezed by competitors at MXP who pretty much already serve much of their long-haul routes and connections from LIN which are just as convenient for those departing from Milan.

Air Italy has also totally depressed business class fares from Milan - the prices are great for consumers but not at all sustainable.

FatCat · Tue Feb 11, 2020 10:58 am

There is a nice graph showing how it's going the air transport market in Italy in this page: https://www.repubblica.it/economia/2020 ... 248274078/
Btw it's an italian newspaper, but if you want to read the article, google translate works just fine.

The graph is taken from ENAC's (the italian FAA) document that can be found at this address: https://www.enac.gov.it/sites/default/f ... o_2018.pdf
Again in italian, starting from page 63 you can find graphs and data about the airlines.
You see FR is first by a *lot* more - 37M passengers, AZ's second with 21M passengers.
IG is 13th with only 1.9M passengers.

IMHO IG will fall, very shortly, and no one will really miss them.
For intra-IT and intra-EU flights FR works just fine. For connections, LH/EN, BA, KL and AF offer good service to EU's biggest hubs. The ME3 serve Italy quite good, too. Chinese and, more in general, far eastern airlines have a big room of improvement. A small airline flying territorial protection flights, charters and main routes many of them in competition with 3 or 4 airlines in a Country where HST connects the two biggest cities more rapidly of the plane has no big meaning.

proudavgeek · Tue Feb 11, 2020 11:03 am

edealinfo wrote:
Al Baker is smart to pull the plug on this investment. However, things Qatar has touched also seem to be jinxed. For instance, they bought into Cathay Pacific....

And Jet Airways (9W)....

Polot · Tue Feb 11, 2020 11:05 am

proudavgeek wrote:
edealinfo wrote:
Al Baker is smart to pull the plug on this investment. However, things Qatar has touched also seem to be jinxed. For instance, they bought into Cathay Pacific....

And Jet Airways (9W)....

That was Etihad.

People in this thread are confusing Etihad with Qatar. Air Italy is their first major questionable investment. QR has also invested in IAG and Latam, and tried to invest in AA. None of those carriers are currently jinxed.

runway23 · Tue Feb 11, 2020 11:09 am

Polot wrote:
proudavgeek wrote:
edealinfo wrote:
Al Baker is smart to pull the plug on this investment. However, things Qatar has touched also seem to be jinxed. For instance, they bought into Cathay Pacific....

And Jet Airways (9W)....

That was Etihad.

People in this thread are confusing Etihad with Qatar. Air Italy is their first major questionable investment. QR has also invested in IAG and Latam, and tried to invest in AA. None of those carriers are currently jinxed.

It would be QR's second failed carrier, first one was Al Maha, that never actually launched.

Polot · Tue Feb 11, 2020 12:10 pm

runway23 wrote:
Polot wrote:
proudavgeek wrote:

And Jet Airways (9W)....

That was Etihad.

People in this thread are confusing Etihad with Qatar. Air Italy is their first major questionable investment. QR has also invested in IAG and Latam, and tried to invest in AA. None of those carriers are currently jinxed.

It would be QR's second failed carrier, first one was Al Maha, that never actually launched.

True but I believe that failing was more due to Saudi-Qatari politics than anything else (although Al Maha still could have ended up a failure even if started ops).

ugobeck · Tue Feb 11, 2020 12:32 pm

A shareholders' general meeting is taking place now in Milan before a sitting Civil Law Notary (no relation with Anglo-Saxon Public Notaries, an entirely different beast). Winding-up seems to be an option. Italian Ministry for Transport delivered at noon GMT a declaration that makes clear that such a decision will be ill-received if taken without previous discussions at governmental level.

Ishrion · Tue Feb 11, 2020 1:13 pm

Air Italy members suspend all decisions and are open to discussions with the government:

https://www.sardegnaierioggidomani.com/ ... decisione/

usflyer msp · Tue Feb 11, 2020 1:20 pm

Isn't the proper term for ending ops in an orderly manner winding down?

seansasLCY · Tue Feb 11, 2020 1:35 pm

Ishrion wrote:
Air Italy members suspend all decisions and are open to discussions with the government:

https://www.sardegnaierioggidomani.com/ ... decisione/

So now the Italian tax payer will get to fund two terribly run airlines...

FatCat · Tue Feb 11, 2020 1:36 pm

Ishrion wrote:
Air Italy members suspend all decisions and are open to discussions with the government:

https://www.sardegnaierioggidomani.com/ ... decisione/

they will ask for public money - what a new thing to do, right?
prepare yourself for endless speculation on who will buy IG between LH and DL and other major airlines - the truth is, no one cares about an airline with 15 routes of which 16 are in a loss...

Blerg · Tue Feb 11, 2020 1:44 pm

FatCat wrote:
Ishrion wrote:
Air Italy members suspend all decisions and are open to discussions with the government:

https://www.sardegnaierioggidomani.com/ ... decisione/

they will ask for public money - what a new thing to do, right?
prepare yourself for endless speculation on who will buy IG between LH and DL and other major airlines - the truth is, no one cares about an airline with 15 routes of which 16 are in a loss...

But why would anyone want to buy them? I mean do they have any real, valuable assets?

FatCat · Tue Feb 11, 2020 1:50 pm

Blerg wrote:
FatCat wrote:
Ishrion wrote:
Air Italy members suspend all decisions and are open to discussions with the government:

https://www.sardegnaierioggidomani.com/ ... decisione/

they will ask for public money - what a new thing to do, right?
prepare yourself for endless speculation on who will buy IG between LH and DL and other major airlines - the truth is, no one cares about an airline with 15 routes of which 16 are in a loss...

But why would anyone want to buy them? I mean do they have any real, valuable assets?

Nope.
Apart of the former Eastern Airlines B737 still in Eastern Airlines colour scheme and some two or three grounded MAXs. But IIRC all the planes are leased.
The A332s were former Qatar's.
The most valuable assets are the flying crews. But I don't see much of a worry finding a job for an A33x / A34x certified pilot - LH, IB, KL are the first majors flying that kind of planes that come to my mind - and less worries for a B73x licensed pilot - easy with FR. Also cabin crews will find a job quickly. But it's better for anyone wanting to acquire IG's assets to wait for them to go bankrupt, and employ crews with huge fiscal advantages.

seansasLCY · Tue Feb 11, 2020 2:00 pm

Seems its official. https://www.airitaly.com/en/

Suspending ops from 26th Feb.

DELTA777 · Tue Feb 11, 2020 2:00 pm

It’s over according to airitaly.com.

Someone83 · Tue Feb 11, 2020 2:11 pm

seansasLCY wrote:
Seems its official. https://www.airitaly.com/en/

Suspending ops from 26th Feb.

What a terrible use of Google-translate on the English part there....

seansasLCY · Tue Feb 11, 2020 2:25 pm

Qatar Airways have released a statement: https://www.qatarairways.com/en/press-r ... s-releases

Basically blaming others for not being willing to fund the carrier.

716131 · Tue Feb 11, 2020 2:27 pm

Just found from a Tweet of AlexinAir in his Twitter page that Air Italy is suspending before end of month. Sad to see another Italian airline go (First was Ernest earlier this year) and now IG is also going out as well.

https://www.twitter.com/AlexInAir/statu ... 3864664064

716131 · Tue Feb 11, 2020 2:47 pm

Forget to say this. With the MAX crisis happens since last March. Why wouldn’t they do anything with the MAX order (Cancelled it etc) or sue Boeing for this.

LH748 · Tue Feb 11, 2020 2:48 pm

Maybe the Gulf carriers finally learn the lesson that building a global empire won't work
EK was clever enough (so far) to not buy themselves into potential markets

Polot · Tue Feb 11, 2020 2:52 pm

SQ789 wrote:
Forget to say this. With the MAX crisis happens since last March. Why wouldn’t they do anything with the MAX order (Cancelled it etc) or sue Boeing for this.

I’m sure the carcass will still go after Boeing for money.

But in the end I suspect shutdown was inevitable even if the Max wasn’t grounded. The airline was just not profitable and had too much competition. IMO they were banking on AZ shutting down, or the Italian government shifting towards favoring Air Italy over AZ. Neither happened.

BrianDromey · Tue Feb 11, 2020 3:25 pm

What will happen to the Air Italy Avios pile I wonder? This is an interesting situation because the airline has stopped operating, but the FFP remains an ongoing entity. If IG has paid Avios Group Limited for the Avios, it will be interesting to see what will happen.

flyingphil · Tue Feb 11, 2020 3:28 pm

So what will happen to the 737MAX ordered?
Looks like three were delivered out of an order of twenty, but seems they were ‘sub leased’ via Qatar Airlines.
So is Qatar stuck with them? Or is a leasing company involved?

NZ321 · Tue Feb 11, 2020 3:28 pm

filipinoavgeek wrote:
The timing of this news sounds really weird considering Simple Flying just published an article about Air Italy and their expansion just a couple of days ago (https://simpleflying.com/what-happened- ... xpansion/; I hope linking to this is allowed, please inform me if it isn't).

With that said, if it really is their end, I'm surprised that they'd die so soon considering their big plans. It makes me fear for the future of startups like Breeze, Starlux, or Bamboo Airways if they remain too ambitious for their own good.

Simple Flying is not proporting to be a fully accurate or particularly reliable source of up to the minute information from source at time of publication, unless I am mistaken which is entirely possible. Seems more like a feature article with personal response and indeed reader response often requested. As I see it, Simply Flying simply update on their understanding of events with the best possible information at the time this was given which may be well ahead of publication. So it's entirely possible that things have shifted since Simply Flying got their information.

upintheair2019 · Tue Feb 11, 2020 3:30 pm

Confirmed on Air Italy website: end of operations on February 25th: https://www.airitaly.com

QR statement: https://www.qatarairways.com/en/press-r ... s-releases

JPhoto · Tue Feb 11, 2020 3:34 pm

Does anybody know who will operate their flights until the 25th?

Someone83 · Tue Feb 11, 2020 3:34 pm

seansasLCY wrote:
Qatar Airways have released a statement: https://www.qatarairways.com/en/press-r ... s-releases

Basically blaming others for not being willing to fund the carrier.

While it is off course their side of the story, they do have a point.

And also making an important statement towards the US3, claiming they subsidized or illegaly fully controlled IG

CALMSP · Tue Feb 11, 2020 3:51 pm

Someone83 wrote:
seansasLCY wrote:
Qatar Airways have released a statement: https://www.qatarairways.com/en/press-r ... s-releases

Basically blaming others for not being willing to fund the carrier.

While it is off course their side of the story, they do have a point.

And also making an important statement towards the US3, claiming they subsidized or illegaly fully controlled IG

it sounds like others can see that the business plan is not viable and cannot continue to throw money away, but AAB takes the approach of it doesnt matter, we'll keep throwing money so we can take over the world.

DELTA777 · Tue Feb 11, 2020 4:27 pm

JPhoto wrote:
Does anybody know who will operate their flights until the 25th?

It appears to be Wamos.

Ronaldo747 · Tue Feb 11, 2020 4:29 pm

flyingphil wrote:
So what will happen to the 737MAX ordered?
Looks like three were delivered out of an order of twenty, but seems they were ‘sub leased’ via Qatar Airlines.
So is Qatar stuck with them? Or is a leasing company involved?

United may take some or all of the whitetails.

enilria · Tue Feb 11, 2020 4:37 pm

JPhoto wrote:
Does anybody know who will operate their flights until the 25th?

This seems odd. Why have somebody else operate the flights for 2 weeks? Is this required by some law?

IWMBH · Tue Feb 11, 2020 4:46 pm

And another one bites the dust, sad for the workers that lose their jobs. Seems like it impossible these days to run a airline in Italy.

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