The industrial plan developed by the fund, which aims at relaunching the carrier, must now be evaluated and closed by September 15, 2022.
Certares’ plan provides for 1,500 hires for 2023 and 100 aircraft in the fleet against 63 current and new routes to North America (Toronto, Washington, Chicago), South America, Africa, and Asia. The fund plans to involve Air France with 9.9% and Delta Air Lines with 10%.
According to “Il Messaggero daily,” Certares is convinced that their proposal is optimal for the development of ITA hoping to be able to implement the achievement of the definitive and binding agreements. For this reason they will work with the Ministry of Treasure and Finances (MEF), with Ita, and with their own partners from the Delta consortium and Air France-KLM.”
In terms of employment, the knot of the approximately 3,000 employees who remained out of the CIG (a special public fund – Cassa Integrazione Guadagni – used to protect workers’ income), of which 1,000 would be of retirement age, still has to be solved. The arrival of new members could favor a relocation, at least that’s what FIT-CISL (Federation of Italian Transport Workers) and the other trade union organizations hope.
Once the negotiation is concluded, the Treasury could sign a simple memorandum of understanding with Certares and its allies or complete the signing of two contracts – the first with the actual purchase and sale and another with the agreements between shareholders.
The conditions for the privatization of Ita Airways
The MEF announced that they decided on ITA to start “an exclusive negotiation with the consortium formed by Certares Management LLC, Delta Airlines Inc., and Air France-KLM S.A., whose offer was deemed to be more in line with the objectives set, adding that “upon conclusion of the exclusive negotiation, binding agreements will only be signed if the contents are fully satisfactory for the public shareholder.”
The go-ahead from the MEF is subject to compliance by the consortium with the Decree of the President of the Council of Ministers (DPCM) of February 2021, which gave the go-ahead for the privatization of Ita Airways.
Three essential aspects for ITA Airways, in addition to the financial one, highlighted during some parliamentary hearings by the Minister of Economy, Daniele Franco, were: the industrial dimension, with the aim of having a solid and profitable company; the company’s growth prospects, with access to strategic markets and long-range operations deemed crucial; and the development of quality and sustainable employment.
The consortium, it is assumed, would leave the Treasury at least a 40% stake and the right to appoint the company’s president and veto certain “strategic choices,” said a Reuters source. Press indiscretions in circulation spoke of an offer of 600 million euros against a 60% stake and with a more active role of the Ministry of Economy, which would retain a stake with 40% voting rights and voice in the key choices for future developments.
ITA flies to India
Despite the fibrillation related to its privatization, Ita Airways expanded its long-haul network with the announcement of the start of direct connections to India.
From September 1, in fact, the Italian airline has opened sales for the new flights that will connect Rome Fiumicino Airport to Indira Gandhi International Airport in New Delhi.
The new connections will be operated with the latest generation Airbus A330s, with 3 weekly frequencies every Monday, Wednesday, and Saturday starting from December 3, 2022.
Besides India, the other winter innovation of the Ita Airways operation is the start of operations for the Maldives with a direct flight between Rome and Malé which will also start in December 2022.
Facts about Certares
Founded in 2012 by Michael Gregory O’Hara, the Certares fund brings together a team of experienced private equity and operations professionals with experience in investing, transactions and management. With $10.2 billion in assets under management, Certares conducts investment businesses that focus on travel and tourism, hospitality, business, and consumer services. Certares holds shares in companies that sell travel or services such as American Express, Global Business Travel, Tripadvisor, Hertz, and luxury travel agencies in the United States. Its market value is over US$10 billion.
Certares currently has 3 offices: the main one in Madison Avenue in New York, one in Luxembourg, and one in Via dei Bossi, in Milan.
O’Hara was previously CEO of the special investments group of JPMorgan Chase, as well as CEO of One Equity Partners, the private equity arm of JP Morgan. He also holds the presidency of American Express Global Business Travel and Hertz Global Holdings. O’Hara is also on the board of directors of Singer Vehicle Design, TripAdvisor, and the World Travel & Tourism Council.