Qatar Airways-backed Air Italy Ceases Operations

 - February 11, 2020, 1:30 PM

Less than two years after commencing operations under the Air Italy brand and with Qatar Airways as a 49 percent shareholder, the Olbia, Sardinia-based airline on Tuesday announced it would cease operations and liquidate. Both its domestic and international services will continue until February 25 but will be operated by other carriers “with the aim of minimizing the inconvenience for passengers,” according to a statement on its website. The decision to proceed with the “liquidazione in bonis” of the company follows a shareholders’ meeting earlier today.

Qatar Airways stressed in a statement it has “continuously provided all possible support” to the carrier since the acquisition of a minority stake in September 2017 and “was ready once again to play its part in supporting the growth of the airline.” But, it added, “this would only have been possible with the commitment of all shareholders,” indicating Air Italy’s majority shareholder, Alisarda—which is controlled by Aga Khan—was no longer willing to fund the loss-making airline.

Air Italy launched early 2018 and essentially was a re-start of Meridiana, the Sardinian airline owned by Aga Kahn, with support of Qatar Airways. It envisioned becoming Italy’s flagship carrier, replacing Alitalia, which had filed for administration, offering a service mirroring that of its minority shareholder. The carrier would build a hub at Milan Malpensa airport, operate 50 aircraft and carry 10 million passengers in 2022. However, the investments necessary for the relaunch, the grounding of the Boeing 737 Max, and an overly ambitious long-haul expansion led to a loss of €160 million ($175 million) in 2018. Despite a tweaking of its network, and scaling back several long-haul routes, losses continued to increase to close to €200 million in 2019, according to Italian media.

“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,” the Doha airline said. It noted that, despite its 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.”

Air Italy’s collapse marks the second unsuccessful venture of a Gulf carrier in an Italian airline. Alitalia filed for administration in May 2017 despite a major capital injection and restructuring led by Etihad Airways. Like Qatar Airways in Air Italy, Abu Dhabi-based Etihad Airways owned only 49 percent of Alitalia because EU rules require that the bloc’s airlines are majority-owned and controlled by EU interests.