As SAA struggles to survive, Air Italy will end operations and liquidate. It is the latest airline to fail

Business Insider US
Air Italy

Less than two years after launching its first flight, Italian airline Air Italy announced on Tuesday that it would liquidate.

The airline said it would continue to operate flights through February 25. Anyone with flights after that will receive a refund after requesting one from the airline. Passengers scheduled to travel before February 25 can also request a refund instead of traveling.

Air Italy is the latest airline to collapse, following 2019's bankruptcies of Iceland-based Wow Air, British travel company Thomas Cook, Indian airline Jet Airways, and French budget carrier XL Airways.

South African Airways is in its own battle for survival after being places into business rescue last year. According to some reports, SAA may have suffered a R9 billion loss in the past year alone – meaning it loses R930 for every passenger it (and is subsidiary Mango) transported.  Earlier this month, the Developmental Bank of Southern Africa extended a last-minute R3.5bn loan to SAA to avoid the airline from being liquidated. 

EXPLAINER: How SAA landed in such a mess – and what will happen next

Air Italy was effectively a rebranding of legacy Italian regional carrier Meridiana, which was itself the product of mergers with several other small Italian carriers.

Qatar Airways acquired a 49% stake in Meridiana in 2017, overhauling it and rebranding as a long-haul airline using a traditional hub-and-spoke model. The airline used Milan Malpensa airport as its hub, differing from Rome-based Alitalia, the Italian flag carrier.

The airline reportedly lost €164 million in 2018 and €200 million in 2019, respectively R2.7 billion and R3.3 billion,  at current exchange rates.

It had 20 737 Max aircraft in its fleet for regional connections out of Milan Malpensa, but those planes have been grounded since March 2019, forcing the airline to reconfigure its flight schedule. It leased Airbus A330 aircraft from Qatar for long-haul flights.

Qatar could not increase its investment or inject cash into the airline as it struggled due to European Union laws, which limit foreign ownership of companies to a minority stake.

Alitalia has also faced financial difficulties, relying on repeated rescue efforts from the Italian government.

In a statement, Qatar Airways suggested that the airline's other owners were unwilling to continue operating at a loss:

Since the acquisition on 28 September 2017 of a minority stake in Air Italy, Qatar Airways has strongly believed in the company and in its potential, supporting management's proposed business plan with a view to improving Air Italy's growth and job creation, with the addition of long-haul routes and numerous in-flight service improvements, in line with Qatar Airways' globally renowned high standards.

Despite our minority shareholder's role, Qatar Airways has continuously provided all possible support to Air Italy right from the beginning, from releasing aircraft from our fleet and ordering new aircraft for Air Italy, to backing management choices and injecting capital and investment as required and permitted.

Even with the changing competitive environment and the increasingly difficult market conditions severely impacting the air transport industry, Qatar Airways has continually reaffirmed its commitment, as a minority shareholder, to continue investing in the company to create value for Italy and the travelling public and to provide support for Air Italy and its staff because for Qatar Airways the focus on employees is a core priority in its strive for excellence - in addition to supporting local communities and other stakeholders.

For that reason, Qatar Airways said it was "ready to once again to play its part in supporting the growth of the airline." But that, according to the statement, "would only have been possible with the commitment of all shareholders."

Receive a daily update on your cellphone with all our latest news: click here.

Also from Business Insider South Africa: