Italy’s newest airline may be forced to pay far more than it hoped to keep the Alitalia brand alive. Reports suggest a starting price of 290 million euro (~$341mm) for the public auction of the brand, roughly double the previously appraised value.
Italia Trasporto Aereo (ITA) indicated its intentions to buy the Alitalia brand at auction in August. It is core to the company’s planned service launch on 15 October 2021. But with a limited budget for the company’s first couple years, this price tag could prove challenging.
Restrictions on eligibility for bidders work in the company’s favor. Auction participants must hold a valid air carrier operating license from their national authority and a net worth of at least 200 million euro.
Still, that leaves plenty of opportunity for other airlines to enter bids that could force ITA to pay more than it wants.
If the initial reserve is not met the price could drop. But no guarantees on that front. Fortunately for the airline, it does appear that the sale will proceed, even if the reserve price cannot be secured.
Timing on the transaction will also likely prove challenging for ITA. Access to the deal room can be requested until 30 September. That leaves just two weeks for the process to complete if ITA is to own the branding when it expects to launch operations on 15 October.
Those plans call for ITA to operate 52 aircraft, all carrying the Alitalia branding.
If the company does not own the brand at that time, operating the planes carrying those marks could prove risky. If another company ultimately wins the auction, even more so.
ITA’s initial funding from the Italian government stands at 700 million euro this year. An additional 650 million euro is expected across the two following years.
Or no other qualified bidders emerge and ITA manages to grab the brand for nearly nothing. Which raises the question: Is it worthwhile for another European airline to spend a couple hundred million just to screw with the Italian government?
Especially knowing that whoever else buys the brand will almost certainly still have operations in Italy going forward?
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