Some of the key takeaways from Aviation Week’s James Pozzi’s interview with Atitech president Gianni Lettieri at the MRO’s Naples facility.

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Rush Transcript

Lee Ann Shay:

Greetings and welcome to this latest MRO Podcast. I'm Lee Ann Shay, Aviation Week's executive editor for MRO and business aviation. And I'm here with James Pozzi, Aviation Week's MRO editor for the EMEA region. Today we're talking about Italian MRO Atitech, which is looking to secure the maintenance assets of defunct national carrier Alitalia, including its MRO facility in Rome. James, you recently met with Atitech President Gianni Lettieri at the MRO's Naples headquarters. What's the latest on the Alitalia maintenance acquisition?

James Pozzi:

Thanks, Lee Ann. Yeah, that's really moving forward at the moment over the past few months. So Gianni, when I met him in Naples a few weeks ago, told me that Atitech is close to concluding the deal to acquire the maintenance assets of Alitalia, which of course ceased operating as an airline in October 2021. The tender was submitted in the early part of this year, which basically enabled domestic and international investors to tender for Alitalia's maintenance business while also being on the basis that any deal would see ITA Airways, which of course is the successor airline, government backed of course, to Alitalia.

James Pozzi:

The target to complete the acquisition, or at least announce it, is the first of July, so just a few weeks away now. Naturally, this would see Atitech, which it's fair to say covers most major aircraft types, add further capability through Alitalia while acquiring ownership of a sizeable maintenance location in the form of its facility in Rome. It would also acquire around a thousand staff from Alitalia's maintenance operations, so there's the workforce side to consider as well, that's a sort of big shift as well.

James Pozzi:

To hear a little bit more about what they have planned, here's a little clip from my interview with Gianni in Naples a few weeks ago:

Gianni Lettieri:
We are concluding the deal with the people that are now in Alitalia. . . . From next two-three weeks we will sign, and the target is to start the first of July. My idea, our idea, is to go back fifteen years ago, when Alitalia maintenance was one of the biggest in Europe, and to do everything from base maintenance to line maintenance, probably next time shop for engine - everything.

James Pozzi:

So as you can hear, it's interesting there how much Gianni specifically mentions engine MRO. Obviously, Alitalia has capability in that area, and Atitech doesn't in terms of full overhauls of engines. So that's pretty self explanatory in terms of Atitech's intentions there. It all does make sense, and that's certainly something that's come up a few times during conversations over this year with them about the engine side of the maintenance business.

James Pozzi:

Chief among its aims is to bring back international airline customers to Rome's Fiumicino Airport, Gianni told me. Alitalia's maintenance division had around 80 customers at the end of 2021, so there was obviously a big customer base already in play there when the airline ceased operating. Gianni also mentioned to me that it would acquire Alitalia line stations both inside Italy and outside of the country across other locations worldwide.

James Pozzi:

So with this acquisition, a very strong independent MRO would be formed, so that Atitech considers itself further strengthened through this acquisition, and this would also bring about major consolidation in Italian aviation, of course, so that's the major flag carrier which was over 70 years old at the time of its demise. Some parts of that are merging, or at least being acquired by Atitech, which really is the last company standing in terms of MRO but it's certainly in a much stronger state... well, it would be with the acquisition.

Lee Ann Shay:

Yes. A lot of really good information. Government backed ITA Airways was launched late in 2021 to replace Alitalia as the new flag carrier of Italy. What can you tell us about Atitech's involvement with the airline's maintenance?

James Pozzi:

Well back in March, Atitech signed a preliminary MRO agreement with ITA Airways. This airline entity is as you say government owned. So in this new form Atitech will essentially be the maintenance partner for ITA Airways, so they would very much be working together on this; there'd be a lot of cross-company involvement there. Gianni thinks, ultimately, this is a good thing for Italy's MRO industry, the consolidation taking place, as he explains here:

Gianni Lettieri:

Yes, I think so. . . . it will be our customer, too. We signed the contract with ITA. We signed the contract, it was simply for next ten years, and default to us to buy . . . maintenance.

James Pozzi:

Ultimately, this preserves jobs and strengthens Atitech as an MRO while giving maintenance coverage to Alitalia's ITA Airways successor. So, very much a kind of made in Italy deal going on here. It is generally seen by the market as a positive, the consolidation.

Lee Ann Shay:

While this consolidation sounds really positive, what challenges does Gianni see on the horizon?

James Pozzi:

Well, having readily available capacity if demand picks up is something he has spoken about with me. Gianni also sees a more competitive aftermarket given the consolidation that is taking place, so that's maybe one element that... one challenge that would arise out of this consolidation that we've been hearing about a lot over the last couple of years. It maybe hasn't happened at any great pace so far, since the pandemic certainly. Obviously, there'll be a lot of companies vying for work as MRO demand increases over the next few years, and I guess servicing that demand could be challenging. Here's Gianni's take on challenges:

Gianni Lettieri:

Yes, because I think that the company, the mission company, is . . . just to fly, and the other factor of the company, they have to ask to the people that do this business. So maybe the future is one company is the . . . company, and the other is maintenance company. Maybe is better for balance.

Lee Ann Shay:

And finally, Atitech has recently added some new capabilities. What can you tell us about these?

James Pozzi:

Yeah, at the end of May announced part one for flight approval for the Airbus A220, formerly the Bombardier CSeries aircraft, and the A350 to be added to the base of maintenance capabilities as well. These of course will be done out of Naples, its main base in southern Italy.

James Pozzi:

Also interesting in terms of capability additions, maybe going back to last year, one of the interesting things I got to witness in Naples was the partnership that was announced in 2021 with Israel Aerospace Industries, IAI. The passenger to freighter conversion projects on Boeing 737-700 and -800 aircraft. This is underway in Naples, and we'll see more work to follow, there's more commitments there for the PTF conversion program.

James Pozzi:

I'll be writing a bit more detailed about this PTF program in the next issue of Inside MRO, of course along with other Atitech activities that are taking place in Naples, and how it is planning to move forward with the Alitalia acquisition, and also maybe what other capabilities it's got its eye on next after the A220 and the A350 and of course building up this PTF conversion line capability. They do see a lot of promise in that as a program, and having done their first conversion recently in Naples, they are very enthused by the offering. That's something that could be a good revenue driver in years to come.

Lee Ann Shay:

Thank you James, and thanks for the plug July's Inside MRO. I look forward to seeing your feature hopefully in the next few days. I'll get that into production. And listeners, please join us again in two weeks for another MRO Podcast episode. Make sure you don't miss it by subscribing to Aviation Week's MRO Podcast in Apple Podcasts, or wherever you listen to them. Thank you.