Meridiana/Air Italy: misconduct never seems to end

April 13, 2020 0 By Gaetano Intrieri

I’ve been thinking a lot this morning about the many, maybe too many, Italians living these Ester times in distress when thinking about their future. Nothing will be the same after this tragic pandemic, and today, more than ever, our Country needs investments and investors. Today, more than ever, we should be looking back and by taking out all possible subjects’ private interests, we’d need to identify who the possible subjects to ask for contribution in designing a possible, stable, future for our unlucky Country are. Obviously the so called FDI (Foreign Direct Investment), which our Country received since the end of the war, often turned out to be non-profitable for the many institutional and private investors who believed in the potential of Italian economy, starting from creative businesses and touristic ones which traditionally have created more value than other industries for Italian account deficits. Among these subjects who believed in the potential of our Country, in particular by investing many monetary resources in a region of rare beauty such as Sardinia, we certainly have to include Prince Karim Aga Khan, thanks to whom an area of rural vocation was able to show around the world its extraordinary natural beauty. Ismaili Prince really was the elder brother for many people of the island and determined like nobody else its economic growth by envisioning before anybody else the enormous sociocultural and economical opportunities triggered by those rare natural beauties.

Prince Aga Khan never stopped loving that land and I’m sure the dramatic decision to terminate the airline operations which he created more than fifty years ago, and which I’m sure he must have loved beyond any reasonable passion, has been a painful choice. Also considering the enormous amount of money that he had to invest over the years to cover the large losses of Meridiana/Air Italy. Huge amount, billions that nobody else would have spent, and I’m sure the Prince was totally aware of that, but his love for Sardinia and its people along with his religious upbringing always brought him to cover the constant yearly losses, to keep the firm alive.

Every single strategy unfortunately revealed to be a losing one under the economic aspect and no worth was gained by the acquisitions of Eurofly and Air Italy, as well as no improvement was brought by the managers’ whirling turnaround, which haven’t been to optimize the internal processes to produce effective outcomes and in turn to bring the airline to an optimal market positioning consistent with its size threshold.  

Unfortunately for Prince Karim Aga Khan and for Meridiana/Air Italy employees, nothing worse could happen than to have a partnership with Qatar Airways, one of the worst run businesses in aviation world history, as widely stated by the most important US airlines top managers. The profit’s antithesis of Qatar Airways is hyperknown among insiders and is second only to Alitalia, but in this Country where anything is impossible, suddenly the former Minister of Economic Development, Mrs Federica Guidi brought up the idea of a “cold fusion” between the Prince and Qatar Airways, in order to invest and take care of what was then an airline in serious economic and financial crisis. 

From the day of its establishment, the Italian Ministry of Economic Development, has never managed to solve any industrial crisis, but only to waste a lot of public resources to feed the Extraordinary Commissioners’ pocket, which in turn constitute a delicious cluster of political and business lobbying and which are always the same people, because often nominated according to influence peddling. Well, Ministry brought the discussions ahead for about two years in order to convince the Emir of Qatar and the CEO of Qatar Airways Al Baker, to invest in Meridiana. In more than one occasion I tried to advise one dear friend of mine, a top manager at Ministry at that time working on crisis resolutions, and I remember that the same day Al Baker was in Milan to introduce with boasting declarations Qatar’s plan for Meridiana, renamed Air Italy with its elusive 60 aircrafts based in Malpensa, I was having dinner in a renowned restaurant in via Veneto with this Ministry’s manager friend of mine, whom I told very clearly that nothing that Al Baker was declaring would be actually accomplished, and that in two or three years the Qatari would run off leaving both the Prince, and the Air Italy’s employees in big troubles. My friend, remembering my forecasts on Alitalia, was frowning by my absolute certainty and chose to talk about something else. We’ve never taken this topic more till the day that the liquidation’s firm was made public. That day he sent me a WhatsApp text with an emoticon that was worth more than any word.

It was clear since the beginning that in a highly competitive market like the European one, the incoherent Qatari strategies would be losing, especially because if they’d be thinking of using Air Italy to outsmart the strict US protocols on air traffic rights, the three American sisters and the US Senate would quickly make them aware that there was no way to use Air Italy to bend the rules, and when it has been clear in their mind, they stopped all the strategies on Air Italy and they only appointed as executive a subject who we’re still wondering what kind of skills he had to manage an airline and meanwhile they started the margin dumping on the aircraft leases, aeronautical components and services supplied.  The combination of these two elements produced huge losses and once more Prince Karim was forced to pay hundreds of million euros to mend these managerial foolishness till the day he had to acknowledge that the liquidation was the only realistic option.

On February 11th, 2020, in a notary’s studio in Milan, the extraordinary shareholders’ meeting took note that Air Italy had a huge loss of 356 mil Euro already consolidated on November 30th, 2019 and the share capital the statutory reserves were reduced to zero along with the statutory reserves. The company was in the 2447 civil rights article, where in response to the last request by the Board to cover up the losses, after 50 years of history the Prince has been forced to give up. Moreover shareholders decided to prevent the shame of bankruptcy and at the same meeting chose to liquidate the company “in bonis” , that is by making all shareholders commit to the payment of all debts, expenses and whatever needed to be paid to manage the liquidation procedure of the company.

But for this airline and his historic shareholder not even a regular liquidation is being possible. In fact after nominating two liquidators, the most expensive and illogical liquidation in the aviation history took place. Right after agreeing with a “moderate” compensation of 30k euros per month to the two liquidators, among which the ever present Dr. Enrico Laghi, the nephew of Cardinal Laghi and already a commissioner for Alitalia, whose prowess I have widely referred in my multiple analysis on the former Italian flag carrier.

It happens that the liquidation itself becomes an occasion to the Quatari gentlemen to keep on going with the speculation in damage to the company and the other shareholder. And so: 

  • after sending almost 1500 people home jobless in no time
  • after leasing 5 old A330s at double their market value
  • after letting aeronautical components and services to Air Italy at incredible prices in comparison to market prices
  • after letting the company be run by a awkward figure and other inconsiderate managers working with him

After all that! They has been starting to speculate on the redelivery of old A330s leased to Air Italy, taking advantage of the total incapacity in aeronautical business of the two liquidators and of someone left behind by the Qatari to act according to their own interest.

At 9:48 on March 22nd, 2020 Air Italy receives an email from Qatar Airways about the “redelivery conditions” of 4 out of 5 A330s, that reports the following:

Good Morning,
Please be informed, Qatar Airways is planning to perform the physical inspection for all four Aircrafts as part of Technical acceptance from Air Italy as per the redelivery condition.

1.   EI-GGO (MSN:511 )
2.   EI-GGP (MSN:521 )
3.   EI-GFX (MSN:571 )
4.   EI-GGR (MSN:638 )

Please review and provide go ahead to perform the physical inspection for all four Aircrafts. It may be noted that once the inspection is completed, all findings along with the buyout commercial proposal will be provided to Air Italy through Qatar Airways contracts department

To this email, a few minutes later, Air Italy’s Accountable Manager, Mark Boraman, earlier nominated head of Maintenance by the Qatari management, answers by writing as following:

Dear QR Team
Please proceed

 In other words, it is been given the authorization to the Qatari Team to asses “re-delivery conditions” of the aircrafts, eventually charging the non regular conditions of delivery without further assessment and without anyone in charge from Air Italy to check the operations and confirm regularity and coherence of any findings claimed by Qatar. But that’s not all!
Still nowadays, those aircrafts are under Camo management by Air Italy, whose organization is then responsible of compliance with Regulation part M EASA on continuous airworthiness, being those aircrafts still registered under Irish Aeronautical Register. So then, without the issuing of the ARC (Airworthiness Review Certificate), a mandate to operate on aircrafts still under the Italian CAA surveillance, thus EASA, is given to an organization that is “not EASA compliant”. And this to keep going in speculating on the resources and money of Prince Aga Khan and after completely destroying a company and sending home 1500 unaware people, victims of continuous scams. 

I’d like to tell mr. Boraman and liquidators if they’ve watched people on TV desperately crying in front of Ministry of Transportation or mothers crying for the future of their children. I watched them!! I watched people devastated with pain and I believe that Aga Khan’s money and these people deserve respect and professionalism, at least  for the ethical and moral rules that anyone should be feeling inside when seeing such tragedies.  

Unfortunately, troubles don’t stop here for the unlucky people of Air Italy and its historical owner, because Qatari people, on April 5th – 2020 at 14:07, keep writing one more email about the delivery of one of the aircrafts’ engine:

Please find below our commercial proposal for lease engine replacement.
A330 engine change    Amount (USD)
Fixed labor (B1 + B2) 610 m/hrs. 46,659
O & A labor (Findings) 35 m/hrs. based on previous engine change for IG.    2,677
Materials (actual usage) + 10% 50,664

Total (in USD)  100,000
Labor rate is charged as USD 76.94 based on agreed rate in the Agreement with Air Italy as USD 70.00 in 2017 with 3% escalation per year
2017 = $70
2018 = $72.1
2019 = $74.263
2020 = $76.49

Please be advised that above cost excludes engine preservation, components removals and other logistics support for engine shipment. This will be charged on time and material basis.
Request your confirmation and acceptance to above proposal. AWR will be issued for sign off purpose.
Currently we are planning lease engine removal on 7th/8th April 2020.

And in this case too, the answer by mr Broreman is readier than ever, as appears below: 

Thank you for your commercial proposal . Please accept this email as approval to proceed as per below .
Thank you for your support
Best regards

I’ve been working in aviation for many years and I often managed aircraft’ engines substitution both in the States and in Europe, and in this particular case we are talking about grounding a CF6 80E engine, equipped on the A330s. Their market price of this kind of performance depending on the logistic and static conditions varies from 10 to 15k USD on the average. Qatar is charging 100k for such an operation in compliance to a contract that was signed with Air Italy where they are applying a 3% yearly adjustment. It reads that the contract, signed in 2017, shows an hourly maintenance cost of 70USD, despite an easily verifiable average market price of 40USD, moreover Qatar declares a total 608, 6 manhours on the engine against an average that is usually estimated for this kind of performance in a range between 300 up to 350 manhours. Finally, they incredibly charged 50k USD more with regard to unspecified materials. Dealing with these absurd requests, no one claims for further check. Unlike someone that was supposed to work in Air Italy’s best interest, answers: “Yes please, proceed”!!!!

There are no words left! It’s all totally incredible!

If we were to consider how many embezzlements Prince Aga Khan had to bear in his long adventure in air transportation and what massive chance was lost for Italy economy, considering such a man and gifted entrepreneur like him he’s been forced to give up, some of our old and new politicians should be taking a deep thought. But, I’m afraid, this will never happen.

Finally, what’s really difficult to understand is the total absence of any morality and respect towards the pain of all the people who were left without their jobs and without any perspective, crying over what’s going to be of their lives. To them, victims of these inconsiderate managers, from my heart I dedicate my writing and I wish them all the best for their future.