By Joseph M. Calisi (c)2022 All Rights Reserved
It’s been 4 months since Ita Airways has taken flight but questions remain as time goes on.
On the plus side, 1.26 million passengers flew the startup on October 15, 2021, with a solid cash position thanks to a younger roster of employees with a lower payroll. On the dark side, the 15% international fuel price rise can put a crimp on Ita operations and the bottom line. Keeping tariffs low to attract passengers could be compromised by the rising fuel costs.
A major issue is the Omicron variant, which has the influencing effect of slowing air travel with a reduced number of flights (less income) with the same costs still in effect resulting in a poorer balance sheet. Airlines are forced to make ‘ghost flights’ and keep flying planes so they can keep their slots and gates.
While employee costs remain stable for now with an agreement with trade unions, June 2022 brings a new cost. With the entry of the new Airbus airliners, so does the increased number of employees by 4,000 will affect Ita’s bottom line. 2023 will see a 3% contract raise for pilots, 1% for stewardesses and ground support staff – but is that able to keep up with inflation? Healthcare and training costs (that need to be upgraded) increase with inflation and the number of employees.
With the applause that came with Ita Airways as a start-up, can it be sustained?
Only time will tell.