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Qatar Airways Buys a 49% in Italy’s Second Largest Airline, the Ageing Meridiana

Qatar Airways Buys a 49% in Italy’s Second Largest Airline, the Ageing Meridiana

MeridiaQatar Airways Buys a 49% in Italy's Second Largest Airline, the Ageing Meridianana

Things are set to get a little bit more interesting in the Italian aviation market after news broke that Qatar Airways had bought a 49% stake in Meridiana Fly.  Never heard of the airline?  Probably not a surprise if you don’t happen to be Italian – it’s a tiny airline with just 19 aircraft, including old Boeing 737’s, 767’s and even MD82’s.

But behind this airline’s modest business comes the revelation that Meridiana is, in fact, Italy’s second largest airline after the national flag carrier, Alitalia.  The carrier was created in 1963 in order to serve the region of Sardinia.  Today, it’s still mainly focused in the same region but it also operates a collection of long-haul routes to destinations like New York, Maldives and Brazil.

In a statement, Qatar Airways said the move had been made to “strengthen” the airline’s commitment to Italy.  Qatar already fly’s its own aircraft to several cities throughout Italy, accounting for 42 services per week.

Although Qatar has only bought a minority stake in Merdiana, expect their influence to be huge.  In the company’s joint press release, the two sides said a new plan would be announced in “due course”.  That could well see Meridiana get a huge financial boost for what might be a massive expansion plan.

Of course, this isn’t the first time, a Middle East-based airline has invested in the Italian aviation market.  Etihad Airways of Abu Dhabi owned a minority stake in Alitalia which was effectively keeping the loss-making airline afloat.  But with Etihad pulling the plug on Alitalia earlier this year a huge hole in the market could be about to emerge.

There had been rumours that Qatar Airways was thinking of investing in Alitalia when the Italian carrier first collapsed into administration.  And while that might still turn out to be true, it’s more likely that airline bosses decided the opportunity was too great a risk to take.

Alitalia’s massive debt, huge cost base, inefficient working methods and highly unionised workers are said to have put several bidders off making a serious bid for the airline.

One contender had been Ryanair, the largest low-cost airline in Europe who had been eyeing a break into the long haul market.  Ryanair already has a healthy market share in Italy so acquiring Alitalia would give it instant access to long-haul aircraft and routes.  But even that potential lifeline has been cut.

Sources close to the Irish airline say Ryanair will no longer make a bid for Alitalia because of a staffing crisis closer to home.  Ryanair has been forced to cancel thousands of flights over the winter in order to deal with the problem amidst claims that the carrier has expanded too fast.

No such problems exist at Meridiana which will no doubt massively benefit from Qatar’s funding and business acumen.  This isn’t the first time, Qatar Airways has taken a stake in a foreign carrier.  The airline already owns a 20% stake in IAG – The company behind British Airways, Iberia and Aer Lingus and there’s talk of more investments to come.

Akbar Al Baker, Qatar Airways chief executive has said on several occasions he would like to take a stake in a North American airline.  Earlier this year, Baker said he planned to invest in up to 10% of American Airways but quickly reversed the plan when Qatar Airways received significant pushback from American and its employees.

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