Uh Oh: Air Italy Allegedly On The Brink Of Liquidation

Filed Under: Other Airlines

Update: It has now been announced that Air Italy is liquidating, and suspending operations effective immediately.

Wait a second, do you mean to tell me that a Gulf carrier investing in an Italian airline isn’t a recipe for huge profits? How were any of us supposed to know? It’s not like there was a precedent for that!

Qatar Airways’ investment in Air Italy

Qatar Airways has a strategy of trying to invest in global carriers, and a couple of years ago the airline bought a 49% stake in Air Italy.

The intent was for them to completely transform the airline. Historically Air Italy was known as Meridiana, and flew outdated 767s on long haul leisure routes out of Naples and Palermo.

Meridiana’s 767 business class

With this transformation, Qatar Airways instead based Air Italy out of Milan, wanting to turn them into Italy’s new national airline. They got the airline dozens of new planes, and the airline started all kinds of new routes (and then cut some of those flights too).

Air Italy’s A330 business class

Air Italy has been targeted by US carriers as a way of trying to circumvent Open Skies policies, as the “big three” US carriers argue that this is essentially a way for Qatar Airways to operate fifth freedom flights from Milan to the US (which I disagree with, because most of the traffic they’re serving isn’t flying to & from the Gulf and beyond).

Air Italy allegedly on the brink of liquidation

Il Sole 24, one of Italy’s most respected newspapers, is reporting that Air Italy is on the brink of liquidation. By “brink of liquidation” we don’t mean it’s something that’s looming and could happen in the coming months, but rather it could happen very shortly.

The airline was supposed to have a special shareholders meeting on February 18, though apparently that has been moved forward by a week, at the request of the majority shareholder, the Aga Khan.

According to reports, this is being done to decide whether the airline should liquidate or not. Italy’s Minister of Infrastructure and Transport was apparently completely caught off guard by this:

“The decision to liquidate a company of this size is not acceptable without first informing the Government and without seriously considering any alternatives, therefore I expect Air Italy to suspend the resolution until the meeting that we can already schedule starting from the next hour.”

The issue seems to be that Air Italy is 51% owned by the Aga Khan, and that party has decided that they’re not willing to invest any further money into the airline, as losses continue to mount. In other words, they’re willing to just walk away.

Air Italy lost €164 million in 2018, and that was based on revenue of €283 million. That means their losses amounted to 58% of their revenue. My goodness, what are they, a tech company?!

Reports suggest that their losses were even worse in 2019 (and both of these losses are way bigger than anything Meridiana ever reported).

Legally Qatar Airways can’t buy any larger of a stake in Air Italy, meaning that Qatar Airways can either just pour money into the airline without extra equity, or they need to find a new investor.

Air Italy A330

Bottom line

It’ll be worth watching this closely, since it seems like the Aga Khan has had enough. That being said, the Italian government doesn’t exactly have a history of letting airlines go out of business, but rather the government seems to prefer to keep them on life support indefinitely. We’ll see if Air Italy gets that same courtesy.

On the one hand, it would be a real shame to see Air Italy go out of business. The airline has a lovely onboard product and fantastic employees, and I hate to see jobs lost.

At the same time, this concept was doomed from the beginning, and the Etihad & Alitalia situation should have been proof of that.

How ironic it would be if Alitalia stays in business, when they’ve been barely hanging on for the entire time that the Air Italy experiment has taken place.

  1. Italian airlines are a lot like Italian cars, high on style and low on reliability. What are the odds that Italy ends up with 0 “national” airlines when the global economy takes its next dip?

  2. 1 National airline is probably right sized for Italy, the U.S. really only has 3, plus a few regional players. Italy may have almost as many tourist arrivals as the U.S., but they have a significantly lower population than the U.S. at like 60m vs. 330m. The U.S. is also much more spaced out than Italy and has Italy has an efficient high speed rail system competing for domestic travel.

  3. Ben – I have flights (for three people in business class) booked on Air Italy with avios. If the airline does dissolve would you expect this journey to be reaccommodated on BA? Thanks. Mark

  4. Honestly, let’s all calm down. Alitalia has been ‘bankrupt‘ for longer than I can remember. And yes, I know that is different…government owned etc. But the cash will eventually stop for Alitalia. I don’t see ANY reason why Air Italy will be liquidated


    What does it mean that Italian airlines are a lot like Italian cars, high on style and low on reliability? Italian stylish cars like Maserati or Ferrari, how in heaven would you consider these unreliable? On which basis or facts? Very honestly I look at this statement as very inappropriate or even worse it doesn’t make sense, maybe it’s just a bit insolent and for no reason at all.

    Moreover, which Italian airline would be stylish? The only one that has raised the bar is Air Italy, former Meridiana, thanks to Qatar Airways initiative. Other than that I don’t recall any stylish Italian airline, but maybe you can refresh my memory.

  6. I travel to/from Italy quite a bit. Italy and businessmen really need a reliable carrier. Most of my contacts find it easier to fly Internationally via Frankfurt or Muc.

  7. @nicola apologies, I should have named my sources. According to JD Power and Associates Alpha Romeo is 29th out of the 30 largest automakers for reliability. Cadillac is in last place. Exotic cars, like Ferrari, are notoriously unreliable…

    I would note that despite all of their financial troubles, Alitalia never fails to roll out new and stylish uniforms every few years.

  8. Air Italy lost €164 million in 2018, and that was based on revenue of €283.

    @Ben their revenue in 2018 seemed like less than what China Southern charges for a one-way domestic “First class” ticket in China 😉


    Alfa Romeo used to be (over 40 years ago) a stylish car able to compete with the likes of BMW with rear traction and very powerful technical features. But in 1987 it became part of FIAT and that is when the once stylish Italian brand (owned by the Italian government) became a FIAT, not only in terms of ownership but also in terms of quality. Today the brand is far from being recognized, in Italy itself, as a stylish brand. Today Alfa Romeo is competing with Renault and Peugeot, not with Mercedes, Audi and BMW. Moreover Fiat and Alfa Romeo are now part of the giant FCA (Fiat Chrysler Automobiles) with HQ in London (Fiscal Hub) and Amsterdam (Legal Hub), therefore it’s no longer Italian owned.

    So if you wish to name Italian stylish cars, once again, these would be Maserati and Ferrari (also Lamborghini is no longer Italian but German owned by Audi).

  10. This is good news not just for Alitalia, but also for American jobs at US carriers that were targeted by a carrier that never intended to be profitable. While the folks at Air Italy may be out of a job, at least the people of Delta, American, and United will have fair competition, rather than having to deal with absurd money losing Air Italy routes such as SFO-MXP. I am surprised but glad to hear that the blank check that the Qatari government handed to Air Italy has been cancelled.

  11. Remind me to sell, majortity shareholder, the Aga Khan a bridge I have going cheap.

    At the weekend, I read in the Financial Times how he was scammed out of €20m by ‘ransom experts’ purportedly trying to release Syrian hostages. Sending money to anonymous Cypriot and Chinese bank accounts upon the instructions of phone conversations with total strangers is, apparently, very normal in these circles.

  12. Remember you have 120 days from your departure date to call your credit card company to dispute your purchase if you are not issued a credit by the airline.

  13. @DLPTATL, it’s an old joke, but FIAT stands for “Fix It Again Tony”. Italian cars have historically been unreliable. Look up any Consumers Report.

  14. @Etoile

    It was Skype video call and the fraudster wore a rubber mask.

    Unless this is a case of how do you make a small fortune in the airline industry? Start with a big one, chances are that he was just a front for the Qataris true some kind of soft loan.

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