The negotiations between ITA - Italia Trasporto Aereo (Milan Linate) and the European Union on replacing state-owned Alitalia (AZA, Rome Fiumicino) have “ended positively”, and the new carrier will be fully operational starting October 15, 2021, Italy’s Ministry of Economy and Finance has announced.

The long-awaited deal with the European Commission followed months of quibbling over what ITA could expect to inherit from Alitalia and how clean the break should be between old and new company, so that the successor is not liable for returning billions of euros the flag carrier has racked up in state aid.

“The new company will be fully operational starting October 15, the date on which the first flights are scheduled to take off,” the ministry said.

The talks “made it possible to reach a constructive and balanced solution that guarantees the discontinuity necessary for compliance with European legislation. The positive outcome [...] allows to start the procedures relating to the capital increase of ITA and creates the conditions for the signing of a Memorandum of Understanding for the transfer of certain activities from Alitalia to ITA,” it continued.

“The foundations are being laid for a new national carrier for solid, sustainable, and independent air transport, capable of operating in a sign of discontinuity and with solid prospects for growth and development.”

Under the deal, ITA will seek to raise initial capital of EUR700 million euros (USD826 million) to buy assets direct from Alitalia and commence operations. It will bid in a public tender for the Alitalia brand, which has been one of Brussels' requirements for the deal. The newco has said that the brand remains “an essential element” of its business plan.

ITA will take over 85% of the Alitalia slots at Milan Linate and 43% at Rome Fiumicino. It will initially operate 52 aircraft, seven of which are widebodies, to grow to 78 in 2022 with the start of the introduction of newer aircraft, to reach a total fleet of 105 aircraft in 2025, 81 of which will be “new generation”.

Of the 11,000-strong Alitalia workforce, those who “could be hired in the new company number 2,800 in 2021 and 5,750 in 2022,” said Transport Minister Enrico Giovannini. Airline sector unions have strongly rejected ITA’s plans, describing them as weak with unacceptable employment commitments.

ITA said it expects to break even by the third quarter of 2023 and make at least EUR3.3 billion (USD3.9 million) in revenue in 2025.

Meanwhile, the European Commission is still investigating two pre-Covid support measures that Rome granted to Alitalia, loans of EUR900 million (USD1.1 billion) in 2017 and EUR400 million (USD480 million) in 2019.