ITA Airways Records Massive Loss, Seeks to Expedite Lufthansa Deal

ITA Airways reported a dismal financial performance for 2022, revealing the urgent need for a more robust partner to secure the company’s future. ITA Airways ended the year with €1.58 billion in revenues, over 10 million passengers, and a net loss of €486 million.

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According to industry analysts cited by Corriere della Sera’s Leonard Berberi, the airline ranks among the worst-performing companies in Europe. A deal with Lufthansa could be the key -and only hope- to turning the tide for the struggling airline.

Breaking Down ITA’s Finances

In 2022, ITA Airways operated roughly 97,000 scheduled flights, carrying around 10.1 million passengers. The airline’s total revenue of €1.576 billion was mostly derived from passenger transport (€1.272 billion), while the remainder came from cargo and other activities.

ITA’s EBITDA for 2022 was -€338 million, with shareholders’ equity standing at €524 million and a cash balance of €418 million as of December 31, 2022. This figure includes the €400 million capital increase from the Treasury in November 2022, indicating that the airline was at risk of running out of liquidity by January.

Comparing ITA’s Performance in 2021

ITA Airways’ financial performance in 2021 was also bleak, with €90 million in revenues and an operating loss of €147.9 million during two and a half months of operations. The airline launched on October 15, taking over from Alitalia, in a year plagued by COVID-19 variants and travel restrictions. ITA transported 1.32 million passengers during this period.

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ITA’s Operational Performance and External Factors

The airline achieved a 99% regularity of operations and 81% punctuality, attributing the year’s losses to the «start-up» phase and the weak market due to the ongoing pandemic. The company also noted that the «macroeconomic scenario,» including the Russian invasion of Ukraine, played a significant role in its financial performance. Furthermore, the euro/dollar exchange rate significantly impacted the 2022 results.

Future Outlook and Lufthansa Deal

ITA Airways anticipates consistent growth in revenue for 2023, driven by an expanded network of destinations and an increased fleet. The Ministry of Economy and Lufthansa are currently in talks to finalize an agreement that would see the German company enter ITA as a minority partner.

Next Steps for ITA and Lufthansa

The preliminary agreement is expected to be announced in early April, followed by requests for approval from Italian and European regulatory authorities. EU Antitrust is likely to give its green light between late July and early August, after which Lufthansa can begin managing the Italian airline.