ITA Airways Turning Towards Privatization

LONDON – Italy’s newest national airline, ITA Airways, now appears to have taken the final turn to privatize the company after advisers at Italy’s Ministry of Movement prepared draft contracts for the airline’s eventual sale.

Checkered past for Italian airlines

While not too surprising, the move means that, for the first time in a long time, Italy will have a national airline that doesn’t need to be backed by government funds. Since the collapse of Alitalia, the air transport market in Italy has been struggling as many airlines such as Air Italy, which even has the backing of global powerhouse Qatar Airways, could not survive the turbulent market in the region and ceased operations on February 11, 2020 set .

The government is believed to back the deal proposed by Certares, Delta and Air France-KLM, which according to an Italian media outlet suggested the group intends to give 45 percent of the companies’ shares to the Italian state, while MSC-Lufthansa strictly stuck to its offer not to let the state own more than 20 percent.

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Certares, Delta and Air France-KLM are believed to have made an offer in the region of €600 million for the 55 per cent stake in the airline, which was valued in the region of €900 million, would be broken down This can be seen Certares taking a 40.1 percent stake, Air France-KLM 9.9 percent and Delta the remaining 5 percent, with an additional aspect of the deal allowing the Italian government to retain two members on the board, so that they can continue to have voting rights on the future direction of the airline.

Who are Certares?

Certares is a private equity firm founded in 2012 and in recent years has begun to take much more vibrant leadership in the travel industry, investing in companies such as American Express Global Business Travel, Hertz Corp., the airline group Latam and Liberty invest Tripadvisor Holdings and now with its latest investment it will soon own 40.1 percent of ITA Airways.

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This type of private company investment offers great benefits, but like most things, it also comes with some risk. They could be tempted to sell their stakes if the airline’s market value falls drastically, and given the past record of Italian-based airlines wanting to ensure that doesn’t happen, great news not just for ITA but for the Italian government, who will now wish they didn’t have to launch another airline.

ITA Airways must be successful

Not only does the amount of money that the Italian government has put into ITA Airways means that this project must succeed, it is also an indication of the validity of Italy. Every single airline that has taken off from Italy in the last 5 years has subsequently failed, with ITA Airways now in some ways almost the country’s last hope of reviving an airline that will fly the Italian flag around the globe.

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Demand for travel in the European and African markets is growing rapidly and Italy is the perfect place to be the country that bridges these needs while the pre-pandemic hub-to-hub model died out as travel slowly returns Returning to Post-Covid-19 Pandemic Levels Airlines and travelers are refocusing on the hub-to-hub model for many reasons, one of the main ones being staff shortages.

With a modern fleet at its core and new aircraft orders already on the books, ITA Airways will now focus on the future and seek to establish itself as a powerhouse in the European market. This deal is exactly what the Italian government hopes is a reality.

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