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Air Italy Reports Loss of €164 Million in First Year Since Rebranding With Qatari Money

Air Italy Reports Loss of €164 Million in First Year Since Rebranding With Qatari Money

Air Italy Made a Loss of €164 Million in First Year Since Rebranding With Qatari Money

Air Italy reportedly lost just over €164 million in 2018 according to Italian newspaper Corriere Della Sera – nearly three times the loss that it reported in the previous year when the Sardinia-based airline was still known as Meridiana.  Since rebranding to much fanfare as Air Italy and launching a new business strategy the carrier has made less revenue, flown fewer miles and carried fewer passengers according to documents seen by the paper.

The controversial airline, who’s parent company is 49% owned by Qatar Airways, has blamed the sharp rise in losses on costs associated with its relaunch, a number of failed long-haul routes, and the grounding of the Boeing 737MAX – of which Air Italy currently has three in its fleet.

Qatar Airways closed its purchase for nearly half of Air Italy’s parent company in 2017 and the airline relaunched from what was predominantly a little known regional and charter carrier in early 2018.  Air Italy almost immediately caused controversy with critics saying it was simply a proxy for Qatar Airways and that it would put American jobs at risks with aggressive expansion plans for the U.S. market.

“Qatar is launching another assault on U.S. airline employees and travellers,” said Delta’s Ed Bastion of Doha’s investment in Air Italy last December.  Qatar Airways strenuously denies the allegations and has pointed out that its investment is no more than Delta’s investment in Virgin Atlantic and Aeromexico.

That being said, Qatar Airways has invested a lot in Air Italy and has leased out five of its older Airbus A330 long-haul aircraft and Boeing 737’s short-haul aircraft to aid in Air Italy’s transformation.  There are even plans to loan brand new Boeing 787 Dreamliners although that idea seems less certain as Air Italy reassesses its expansion plans.

Photo Credit: Air Italy
Photo Credit: Air Italy

New Routes to Mumbai and Dehli were abandoned within days of starting, while a service to Bangkok didn’t last long either.  Embarrassingly, after much hype, Air Italy had to admit that what many thought were year-round services to Los Angeles, San Francisco and Toronto was only ever intended to be Summer seasonal.

The number of flying hours by Air Italy’s aircraft have dropped from 50,592 to 42,283, while the number of passenger carried has fallen from 2.44 million to 1.91 million.  A decision to drop charter flights has resulted in a €65 million drop in revenues.

Air Italy says the fall in passenger numbers simply reflects a drop in capacity as the airline changes up its fleet with a more premium heavy offering.

“The newly rebranded Air Italy, which began operations on March 1st 2018, necessitated a number of major new investments in 2018, many of which were needed to address historical issues from Meridiana,” explained a spokesperson for Air Italy.

“Phasing out the old fleet, dealing with excess capacity as we migrated to the new network, and managing the surplus reinstated manpower which were inherited. Moving forwards in 2019 – and when removing extraordinary items such as the grounding of our B737 Max aircraft, ongoing legacy costs such as additional surplus reinstated manpower, and flying the PSO routes without compensation – our performance is above budget.”

Air Italy says it expects to see continual growth throughout 2019 and is still deciding on the exact composition of its fleet, although confirms the old fleet will be replaced with modern and more efficient aircraft.

It’s probably no surprise Air Italy has reported a big loss in its first year of being relaunched.  The airline has a very ambitious strategy but has been hampered by some pretty big mistakes and events outside of its control – whether it turns into the airline that Qatar Airways had envisioned remains to be seen, although it’s fairly safe to say that it isn’t the threat that some U.S. airlines want to portray it as.

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