Long-struggling Italian flag carrier Alitalia will fly into the sunset on October 15, with the airline announcing overnight it has now stopped selling all tickets and will cancel all flights from that date.
In its place will be a new national airline named ITA (Italia Trasporto Aereo), state-backed successor to the airline which has been in bankruptcy since 2017.
ITA will inherit some of Alitalia's aircraft, staff and assets such as airport lounges – but not Alitalia's frequent flyer program, which will be abandoned in favour of an all-new loyalty scheme to be run by a third party.
Owned by the Italian Finance Ministry, with its debt slate wiped clean plus €700m in restart funding, the Rome-based airline will launch at half the size of Alitalia, with just 52 aircraft – of which only seven will be long-range twin-aisle jets – but plans to grow this to 78 aircraft by the end of 2022, and 105 jets by 2025.
ITA charts a new flightpath
ITA is set to add up to 81 new aircraft to its fleet, with Airbus reportedly in the lead to win a deal valued at US$5 billion – although Boeing could also swoop in with a heavily-discounted package deal.
The rebooted airline will employ less than a third of Alitalia's 10,000-strong workforce, and run competitive tenders for activities such as ground handling and maintenance, as well as its frequent flyer program.
ITA will initially focus on mainly domestic and intra-European flights, along with a handful of long-range routes from Rome and Milan to New York, Boston, Miami and Tokyo.
"Broadly speaking, the plan should focus on long-haul routes, the most profitable particularly those to the US," says ITA chief executive officer Fabio Lazzerini.
"The long-haul market means privileging the North American market which is under-served and extremely profitable, but further expansion is needed."
"South America is to be kept on standby; we have to think about Asia and China, while Japan is doing very well."
Challenges at home and abroad
The goal is to build a leaner carrier that can focus mainly on international markets, without getting bogged down by the costs and commitments that made Alitalia a ward of the government.
Successive governments have plowed more than €5 billion into the carrier after former shareholder Etihad Airways cut ties in 2017 (having itself invested €1.76 billion in 2014 to buy a 49% stake, followed by €80 million for a 75% stake in Alitalia's MilleMiglia loyalty scheme).
Roberto Gualtieri, Italy's Minister of Economy and Finance, sees the prospects of ITA as representing "a quality carrier capable of competing on the international market."
But ITA may be too small to compete against established airlines and is lacking a partner after years of talks with major carriers including Lufthansa and Delta Air Lines.
Lazzerini considers alliances will be "fundamental" to ITA's future.
"The world of airlines is a world of alliances. It is difficult to remain alone; there are few companies that remain alone. It is difficult to think of being isolated in a global world."
However, Lufthansa and other potential suitors that have accepted state aid from their own governments are either barred from investing under EU rules, or risk a political backlash if they make such a move before paying back their own rescue funding.
Long-haul travel also remains hobbled by widespread border curbs, and the corporate demand that's usually a key driver for intercontinental journeys is expected to take years to fully revive after the 16-month global pandemic.
Closer to home, low-cost competitors such as Ryanair and Wizz have been quick to leverage a lead in Italy's airspace, with flight-tracking firm OAG earlier this year reporting that Ryanair's share of the Italian market had soared from 22% in mid-2019 to 33%.
Additional reporting by Bloomberg