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.
Read More: Alitalia Due (a/k/a Italia Trasporto Aereo) applies for US service
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.
Read More: Europe clears Alitalia debt from successor ITA
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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DaninMCI says
Fun times. So I guess DLD couldn’t even bid per the podcast comments. If it wasn’t for the branding issues I think they should walk away from the name but I’ll bet repainting the logos on the planes would cost them a pretty penny as well.
Seth Miller says
Indeed, we skipped that step of actually becoming an airline. Oopsie.
Maybe next time. Because I’m willing to bet there will be a next time.
Greg says
LOL
A.S. Manderstam says
Alitalia has been ailing for years , it has become something of a joke in international airline circles. Noted for its strikes and poor service it’s brand is worth 500 lire ..which since Italy now uses euros means it’s worth nothing !
Harry Davidson says
When Swissair went bust it had the brand valued at SFr1Bn in its books. The brand didn’t sell, its true market value turned out to be SFr0.
€290M is way too high for Alitalia. If ITA keeps its money in its pocket and goes a completely new name, Italiair or something, everyone will have forgotten Alitalia in 5 years. They can copy the colours, no problem, they are the colours on the national flag.
They are afraid that Ryanair or Easyjet, or possibly Lufthansa might buy it – not at that price.