Air Italy Reports MASSIVE Losses

Shocking to read.

I see Trump’s non-standard capitalization has made its way into headings on this site. Chicago Manual of Style be damned.

@ Memento

Shouldn’t that be “Chicago Manual Of Style”?!

I dunno: to my eyes American English over-capitalises headlines. Every newspaper page (and blog post) is an ugly mish-mash where even the least important words get their own initial capital.

Modern British English tends to capitalise even less on the web than it does in print. News sites like the BBC or the Guardian mainly run headlines as if they were sentences, albeit emboldened. The effect is much less rant-y.

What a surprise! I mean, the track record of the ME3 in doing these kinds of projects is... oh, wait!

While I'm no investor, I think the best would have been to keep some of Meridiana's old routes active as they were making money and expand with some new planes on (some) new routes. That way they still have a back up plan in case they fail.

@John
The ME3 insinuations or otherwise are purely laughable at this point. Trump said as much when he told the US3 to kick rocks and file a complaint through the normal channels for which the US3 have so long refused.

So basically the airline flew more passengers and made more money back when it was Meridiana? Wow, sure is a pity they completely dismantled that brand and basically all of its routes...

Ben

I had the opportunity to have a read through the full financials; they are in Italian and not suitable to be published fully (they’re deposited in the Sassari chamber of commerce) as the company is not publicly listed.

One reason for the large losses - compared to last year - is that Air Italy has bought in the old Meridiana maintenance arm. Previously that was a separate company and its P&L was separate from Meridiana’s. This also means that base maintenance activities are now a cost on Air Italy’s ledger and not on a separate company’s.

On the revenues front, Air Italy has all but discontinued the charter activities that constituted a lot of the revenue streams of the old Meridiana; there’s some ACMI but not enough to offset that reduction.

All in all there are some one-off expenses and a major operative readjustment. I think that 2019 vs 2018 would be a much better way to analyse their behaviour, at least from a revenue and operating costs point of view.

Still do not get the business plan of basing operations at MXP. For travelers from the US, it's a decent business market but not so much for leisure. I think they would have been better off keeping their unique point-to-point routes such as Naples and Palermo, maybe even adding in a few other underserved but popular tourist destinations.

@Memento, I write for a major international publication (published worldwide) and although I write for the North American edition, we are instructed to use international format for titles (because it is read internationally...) This means only the first word is capitalized, and personal names obviously. Only in the US do they capitalize the entire title.

I don’t consider their six across Business Class hard product to be competitive given that their prices are basically equal for what I’d pay to fly AA and DL with better cabins. And making it worse, even from a big market like San Diego, I’d have to position to take their flights. Maybe their business plan is okay for other markets but from my vantage point based in the US, it’s a loser.

@Lucky
So their losses amounted to about 58% of their revenue. Ouch!
So what does a negative profit margin tell us? Nothing useful that we already know.

The only useful info here is
Flown hours in 2018 were down to 42,283 from 50,592 the previous year and the fleet size.

Daily Airborne Hours comes out to roughly 8.5 a bit low given how many A330 they have but still isn't much far off from industry standards.

Which at least can tell, their planes are not horribly utilized and not parked somewhere too long. It's not a scheduling issue, they just can't make money out of their planes.

Great read! A few thoughts:
1. This loss is an insignificant number wrt to the scope of Qatar’s overall investment portfolio.
2. The Hub Spoke model is the most efficient business model.
3. The focus on biz markets makes complete sense. The rest of world is racing to the bottom. Qatar and the others are happy to fill the void at the top with their superior product and service offerings.
4. Bastien’s no-show guaranteed that The ME3 can finally deploy their breath of fresh air services (I.E. “Air travel that doesn’t hurt!) to more Transatlantic markets! Wonderful news!!!

Is anyone surprised? The ME3 don't need to make money. Operating unprofitable routes with massive aircraft that are half empty all while buying more aircraft and expanding...

Since famous comedian Pam Ann has been hired as the star of this airline, its profits went down. What a heck! Pam Ann, now your job will be solve this italian-qatar airline! Did you notice this coincidence, Ben?

Copying is the highest form of flattery. So as Air Italy aims to become the Italian flag carrier it has decided to imitate the current flag carrier Alitalia

MXP still makes sense, but should have kept Palermo and Naples. Italy is tough! So much corruption.

As someone who flew them shortly after they started, I think one of their biggest problems is customer service.
As someone who doesn’t speak Italian, their phone and web site based serviced were almost impossible to
navigate.
I spent half a day on the phone arranging for extra leg room in the flight home from Milan, and when I arrived at the airport they didn’t honor it.
The flight was fine. But nothing about dealing with them was easy.