MRO Amputation Means Clean Break For ITA

ITA’s fleet is planned to be less than half the size of Alitalia’s.
Credit: Alitalia

The future of Alitalia’s maintenance arm is set to lie outside the control of Italy’s next flag carrier, Italia Trasporto Aereo (ITA), which will only be allowed to bid for a minority stake in the MRO provider.

Added to the uncertainty about Alitalia Maintenance’s new owner will be concerns over its future revenue streams, given that ITA’s fleet is planned to be less than half the size of Alitalia’s.

Nonetheless, ITA will be its biggest customer for some time, while the amputation of the maintenance business appears to have been necessary to ensure its viability.

This is because EU State aid rules provide that a new company acquiring the assets of another company is not liable for past aid received by the seller, if the two companies are sufficiently different from one another.

This week the European Commission ruled that ITA will not be liable to repay €900 million of illegal state aid, plus interest, granted to Alitalia in 2017 due to “a number of elements to ensure economic discontinuity between the two companies.”

Of these elements, the EC the emphasized that “ITA will only be able to take over limited parts of Alitalia's handling and maintenance businesses,” adding: “These businesses will be sold in open, transparent, non-discriminatory and unconditional tenders.”

The Commission also highlighted ITA’s much-reduced fleet size and landing slots compared with the former Alitalia, and the fact that ITA cannot bid for Alitalia’s loyalty program.

The Commission also gave its blessing to €1.35 billion of state investment by Italy into ITA over the next three years, ruling that capital injections “are in line with market conditions, and therefore do not amount to State aid under EU rules.”

Alex Derber

Alex Derber, a UK-based aviation journalist, is editor of the Engine Yearbook and a contributor to Aviation Week and Inside MRO.