ITA, the new Alitalia, will have to cut routes, staff and aircraft to become profitable

Italian newspaper Corriere della Sera disclosed some of the savings that Italia Trasporto Aereo (ITA), the successor of bankrupt Alitalia, will have to make in order to become profitable and get the green light from the European Union.

Most of the loss-making routes will be abandoned, for example:

• Fewer frequencies between Milan Linate and Rome Fiumicino.
• A clean-cut of routes such as Bologna-Catania, Genoa-Olbia or Alghero-Trieste.
• The intercontinental routes to Santiago de Chile or Seoul, which combined recorded a loss of 28 million euros, will not be restored.
• The flights between Rome and Pisa or Milan and Trapani, which already before the coronavirus lost respectively 5.5 and 2.5 million, will be abandoned. T
• The fleet will be reduced to 45-47 planes at the beginning, less than half of the 113 aircraft of 2019 and slightly more than the 40 aircraft that still fly today.

Initially, ITA will count just under 60 destinations against the current 50, a number which might rise to 93 in 2025, still 16 less than in 2019. Unsustainable routes need to be closed. And this in some cases will force you to stop where before there was a direct connection.

As some analysts explain, an airline network “is a system of communicating vessels” with a delicate balance. For example: before the coronavirus crisis, the Rome-Florence route lost 6 million euros. But mostly American tourists arriving in Italy with intercontinental connections (more profitable) brought a so-called “feeder value” of over 27 million. This is is a route that ITA will maintain.

Many routes that do not pass through Fiumicino and Linate (such as Bologna-Catania) will disappear because they are not profitable. Activities on Bergamo-Orio al Serio and Milan Malpensa will be closed (with the possible exception of the flight to New York).

Also on the block the connections to St. Petersburg, Kiev, Bucharest and Podgorica. The US remains the main intercontinental market, Japan is considered promising. Ethnic flows save flights with Brazil and Argentina. Operations to Mexico City, Havana and Seoul will be suspended.

Milan Linate will focus on the connection with Rome which should be reduced by 30% as it had an EBIT of -9 million euros, but a feeder value of 50 million. ITA’s idea is to use the slots that are released to move to European destinations.

But the European Commission expects, in exchange for the OK for ITA to take off, the sale of 67% of Alitalia’s slots. ITA also counts on train-plane intermodality.

This Monday, a delicate week opens on the Alitalia-ITA dossier in Brussels. The three commissioners of Alitalia are working on the final proposal to be approved by the EU Antitrust in order to allow the newco to take off in June.

Source: Corriere della Sera