Italy: Airline brand for sale

For a minimum bid of 290 million euros + VAT, interested parties can acquire the naming rights of the insolvent Alitalia (Code: AZ). The public tender started 18SEP21 and will end on 30SEP21. So far, the administrator in charge of the process has not revealed if any offers have already been received. With one exception.

Alitalia is officially insolvent and put under the supervision of a special administrator. Despite empty coffers, AZ continues to fly. For instance, on 28SEP21, from Rome to Milan-Linate and back the next day for €247.00 (eco). However, operations will end on 15OCT21, when newcomer Italia Transporto Aereo (ITA), is scheduled for take-off, succeeding its commercially failed predecessor.
2002 was the last time Alitalia, which belongs to the SkyTeam Alliance (Air France/KLM, Delta, Aeroflot, China Eastern, Aeromexico, etc.) made a profit. Crippled by a toxic combination of strikes, mismanagement, and political interference, all attempts by the Roman government to find a private buyer, failed. Now the chapter of the 1946-incepted airline will be closed for good, with state-owned successor ITA becoming the new Alitalia. Hopefully with greater success. What remains, is the company name, which the Italian government now wants to sell as dearly as possible.

Is €500 million a political price?
Yet, what is a brand worth, associated with flops, failures, and fumbles, whose only “success” consisted of building up a negative reputation over decades. So, the question arises as to what equivalent a potential buyer might obtain in return for the acquisition of the naming rights, provided he or she is not guided by nostalgic feelings.
The Roman government estimates the brand’s value totaling 500 million euros. This figure is based on a model calculation made public these days and – surprise, surprise – tailored to the financial needs of newcomer, ITA. This, primarily because its name is largely unknown, which requires high resources to stimulate demand and attract potential passengers to its booking portal, including forwarders eager to secure cargo capacity for their shipments on board ITA’s fleet. Meanwhile, ITA has confirmed its participation in the public tender to acquire the Alitalia brand. The management also announced that the purchase of assets from Alitalia is part of their business plan.

Questionable financial transfer
This astonishing pecuniary interest situation raises the question of whether the high value of the Alitalia brand of 500 million euros mentioned by Rome can be classified as camouflaged subsidy for setting state-owned newcomer ITA on track. After all, the higher the price for the naming rights, the larger the sum that flows directly into ITA’s vault without the EU competition watchdogs being able to interpret this “robbing Peter to pay Paul” practice as subsidization. The suspicion, at least, is there.

Heiner Siegmund

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