Antonino Turicchi, executive president of Ita Airways, almost breathes a sigh of relief. «We have reached an agreement with an industrial partner who believes in the project and who has decided to make an important investment»he reasons during a long chat with the Courier. After more than six months of close negotiations, at times exasperating due to the load of requests and insights, he can say that he has completed his mission: to find for the tricolor carrier – which in 2021 took the place of Alitalia – a bigger, more solid house that offers development prospects. That “house” was identified in the Lufthansa group, giant with revenues of almost 23 billion euros in 2022 which, in addition to logistics and maintenance, includes the carriers Lufthansa, Swiss, Austrian Airlines, Brussels Airlines, Eurowings and Air Dolomiti.
President, how is the transaction with Lufthansa structured?
“In three stages. The first, after the green light from the EU Antitrust, will see the capital increase reserved for Lufthansa by 325 million for 41% of Ita. In short, we are talking about an important injection».
Is there an idea of when the EU will give the green light to the operation?
“It will depend on whether the operation will be authorized in thirty (working) days or it will take longer. It is very probable that the go-ahead will arrive in the fourth quarter of this year».
Then there are the other two stages.
«In the second phase, between 2025 and 2027, Lufthansa will have the opportunity to acquire 49% from the MEF at a price set at 325 million. If at the end of 2027 Ita has achieved the objectives of the Lufthansa plan, it will award the ministry an “earn out” of 100 million. In the third phase, scheduled for 2028-2029, Lufthansa will be able to acquire the remaining 10% by paying another 79 million. We are talking about a total investment of 829 million».
The ministry is responsible for paying the third, and last, installment of 250 million. When will it happen?
‘We would like to do it now. Together with the first 325 million from Lufthansa, the company will have 575 million in liquidity to be able to support the development phase: in a market, like the current one, which is growing, it is necessary to have the means to expand».
There are those who accuse you of selling off Ita.
“I don’t agree. What we do is allow Ita to make profits thanks to an industrial partner who is committed to supporting the project and developing it. Our company must become a successful project».
The State invests a total of 1.35 billion. Lufthansa will eventually pay 829 million. The public coffers have lost half a billion.
«The state cannot ask Lufthansa to pay for the losses accumulated by Ita between 2021 and 2023 if the German group is not inside the company. It is inevitable that Lufthansa recognizes the value of the investment net of accumulated losses.
Are there no other subjects interested in Ita?
«I have not had lines of people knocking on the door and saying ‘here is 325 million’. Wish I had had them.’
What if someone now showed up and said “I would like to invest in Ita and I would pay even more”?
‘Too late. This is an operation structured in such a way as to give the person who believes in it the possibility of earning in Ita».
Why?
«If Lufthansa earns with Ita it means that it invests in the company, makes it grow, hires in the country, ensures that the 5,500 employees envisaged in the industrial plan work in a company that makes profits, which is based in Italy, which bet on our country».
What will governance be like when Lufthansa is allowed to enter?
“It will be a simple structure. The board of directors will remain with five members: three, including the president, will be appointed by the MEF. The other two, including the managing director, will be chosen by Lufthansa».
Until then, will we go ahead with the current board of directors which is under the prorogatio regime? “We need a new board of directors until the EU Antitrust approves the operation”.
With you still president?
‘I was tasked with carrying out the operation. Maybe it took me a few more months but we did it».
But someone is needed in the transitional phase to carry on the dossier. That could be her.
“If they deem it necessary, yes, but for a limited time. I want to lend a hand, I don’t want to have operational responsibilities in Italy».
What are your goals for this year?
«We aim to bring Ita to operational break-even when Lufthansa joins. We have budgeted to close 2023 with an Ebitda of -66 million, but we are doing better and Lufthansa’s commercial contribution could quickly bring us even more positive results. If we have a good summer season we can get closer to break even. For me it is important because it means that we have a company that flies, does not lose and has the characteristics to grow».
To get to 2027 with what numbers?
“With revenues of 4.1 billion, a positive EBITDA of over 700 million and profitability of 8%”.
Let’s talk about the fleet. A plan has been announced which will increase the current 71 aircraft to 94.
“It is one of the elements of the operation with Lufthansa: the investment will allow us to fly young, modern aircraft that pollute less and consume less fuel”.
One of the critical issues for Alitalia was the progressive reduction of the fleet for intercontinental flights.
‘True. For this reason, by 2027 there will be 34 long-haul aircraft, more than a third of the total, which will bring about 1.9 billion euros into the coffers, therefore 46% of total revenues. The operations carried out with Alitalia – that of the “brave captains” or that of Etihad – did not have these possibilities. We will be able to achieve enormous commercial, operational and management synergies with Lufthansa. And with them at 90-100% there will be the guarantee of having a solid industrial partner, willing to carry out a unique operation in the country».
There is the crux of the lawsuits against Ita of almost 1,500 former Alitalia employees.
“On this point we need to be very clear. The Ita-Lufthansa operation is completed to all intents and purposes, albeit subject to the OK from Brussels. If the lawsuits call into question the discontinuity between Ita and Alitalia, the Germans will be able to exercise the right of withdrawal: a hypothesis that I consider remote».
Did you have any idea why the operation was not concluded with Certares, the US fund which on 31 August last won the previous challenge against the MSC-Lufthansa consortium?
«Because Certares was looking for the “way out”. Lufthansa, on the other hand, wants to integrate Ita into its group as soon as possible. This investment can give the Germans much higher results than the other operations it has done. It has premises similar to those of Swiss, but better in terms of the market».
Swiss is the group’s most profitable company.
“I made a bet with Lufthansa CEO Carsten Spohr: Ita will become a more profitable company than Swiss.”
Ita leaves Malpensa, some criticize. Even if today it has only one flight, to New York.
«But how can one speak of “abandonment” if Ita will have synergies with the Lufthansa group which has a massive presence at Malpensa. The logic is different: the airport will be served within the network of connections of the entire group, we will no longer be alone».
Opponents say the Germans will drain intercontinental traffic from/to Italy to their hubs in Frankfurt and Munich.
‘But that doesn’t make sense. They would not benefit from moving a traveler onto the Lufthansa flight because Ita will also be part of the group’s revenue system. And I add: we will also increase the long-range fleet. If the Germans had wanted to do what they are being accused of, they would have done sooner to invest the money allocated for Ita in Air Dolomiti to develop the feeder system. But that’s not the case, in fact they’re aiming for Ita».
What fate will the Alitalia brand have?
«Ita has elements of recognition that are inferior to those of Alitalia, we cannot deny that, if only because it has only been around for a short time. When the company achieves certain goals, it might make sense to bring it back to life. But first let’s aim to make profits, then we’ll see».
One might wonder: what is different this time around from other operations on the country’s main carrier?
«In the past, airlines with extremely weak size and financial strength have been created, without the premise to be able to compete on the market as a “full service carrier”. This time it was decided to take a direction that leads to going with the strongest, that is Lufthansa, in a sector that has seen for some time a process of consolidation of the airlines».
What does closing a difficult, let’s even say “mangy” dossier like Ita teach?
«That the State is a somewhat particular shareholder, you need to know how it thinks. On complex dossiers involving the public, someone is needed who knows how to explain them to the private interlocutor and knows how to proceed».
In Italy there are not many agreements with industrial partners.
«Because the latest operations have seen funds as protagonists. But some dossiers would be much easier without the funds: they are not the best partners. We need partners who believe in those operations from an industrial rather than a financial point of view. And you need management».
However, it is also necessary to have the support of the reference shareholder.
‘Sure. And I was able to count on the trust of both the government and the MEF. In particular, I have always had Minister Giancarlo Giorgetti by my side: even in the most complicated moments, I knew that he was there to support me. If I have been able to do certain things it is because the minister wanted the operation, as well as the MEF executives led by dg Riccardo Barbieri Hermitte».
Have you ever had a moment of discomfort during the negotiation?
“More than once. But we did it».