Atitech’s Plans For Its Alitalia Maintenance Acquisition

FlightService aircraft at Atitech maintenance hanger in Naples, Italy
Atitech operates five maintenance hangars at its Naples site.
Credit: James Pozzi/AW&ST

When Atitech celebrated its 30th birthday with a lavish ceremony at its Naples-Capodichino Airport base in late 2019, it did so from a strong position as a multiservice independent MRO. The company had just achieved its best year to date financially, with revenues of €64 million ($67.5 million) and was expanding at a compound annual growth rate of about 30%. Overall, in 2019, 16 new customers were won as 234 aircraft entered its five hangars during that 12-month period.

Going into 2020, the mood was buoyant about further growth until the COVID-19 pandemic took hold in the first three months of that year. Fortunately, Atitech had a strong backlog of contracts in place so the drop-off in 2020 was not so drastic. However, the following year was worse, and it is only this year that the recovery is really starting to take place.

New customers are arriving in Naples, and functions such as storage services for lessors undertaking aircraft repossessions remain steady, although these agreements are more medium-term than long-term. The company has storage capacity for 1.5 million ft.2 and operates five hangars, handling both narrowbody and widebody aircraft types.

Having weathered what he feels is the worst of the crisis, Atitech President and CEO Gianni Lettieri, whose private equity fund Meridie has controlled Atitech with an 85% majority share since 2009, now has new priorities. Chief among these is the acquisition of the maintenance division of defunct Italian national carrier Alitalia, which ceased flying in October 2021 following several years of unprofitability, marking an end to more than 70 years of operation.

The MRO provider was first linked with an acquisition late last year after the Italian government announced a tender process aimed at disposing of its handling and maintenance divisions. In late May, Lettieri told Inside MRO that the company is concluding the deal with Alitalia, and he expected it to be finalized imminently, with a target start date for operations of July 1. Atitech submitted its tender earlier this year, which enabled domestic and international investors to evaluate Alitalia’s maintenance business.

“My idea, our idea, is to go back 15 years ago, when Alitalia maintenance was one of the biggest in Europe, and to do everything from base maintenance to line maintenance,” Lettieri says of the acquisition, which he describes as important not just for the company but also for the Italian aviation industry. He adds that engine capabilities, which Atitech does not currently offer, are also of interest in relation to the Alitalia maintenance acquisition.

“Alitalia Maintenance at Rome Fiumicino did have a good shop to do engines, and when they decided to move away from this, the engine shop was acquired, and the rest of the capabilities went outside of Italy to the likes of Air France Industries, Lufthansa Technik and Bedek,” he says. On the airframe side, an alleviation of constraints to widebody aircraft capabilities in Naples through utilizing Alitalia’s facility in Rome is also cited as an advantage of buying the operation. At present, two of Atitech’s five Naples hangars handle wide-body aircraft.

One of Atitech’s main aims is to bring international airline customers back to Italy’s capital, Lettieri says. Alitalia’s maintenance division had around 80 customers at the end of 2021, and its maintenance split was estimated at 70% third-party customers and 30% Alitalia fleet in 2022. The intention is also to take control of Alitalia’s line stations, which are located across Italy and the rest of the world, including locations in Buenos Aires, Argentina; Casablanca, Morocco; Paris and Sao Paolo. More than 1,000 staff in the technical division also would transfer as part of the sale, which would add significantly to Atitech’s workforce. In Naples, it employs more than 500 full-time staff, a figure that does not include contractors.

Alitalia has been replaced by ITA Airways, a government-backed successor airline that is now Italy’s national flag carrier. ITA commenced flights in the same month that Alitalia wound down operations. Having signed a preliminary maintenance contract with the fledgling airline earlier this year, Atitech will be heavily involved with the maintenance of the new carrier, which will become one of its customers for the next 10 years. The agreement, signed in March, was pending Alitech's acquisition of Alitalia’s MRO unit.

Over the past two years, including during the pandemic, Atitech added further type approvals, and this is continuing in 2022. At the end of May, it announced Part 145 certification for the Airbus A220, formerly the Bombardier C Series aircraft, with the A350 to be added to the list of maintenance capabilities as well. These followed recent approvals for the Boeing 737 MAX and Airbus A330neo. The company expects Boeing 787 certification to follow this year and is also looking at setting up an avionics workshop to accompany recently established battery, wheels and brakes and composite repair shops.

While it is adding approvals, Pietro Pascale, general manager at Atitech, sees some market hurdles ahead. “The challenges are that price is increasing, especially on materials and shipping costs,” he says. “It’s important to make efficiency [a priority] and to have a consignment stock or a bigger parts stock available in order to avoid transportation on a case-by-case basis,” he adds. Despite the challenges related to industry conditions, Pascale says Atitech still works with the same supply chain partners that it did before the crisis and will take advantage of the larger capacity afforded it with the acquisition of Alitalia. He is less concerned about the labor issue and says Atitech has retained a strong pipeline of young technical talent. Naples’ concentration of heavy industries as well as Atitech’s prominence in southern Italy has made it an attractive company that is able to source technical skills locally.

The company has also followed the trend of MROs that are growing their capabilities in order to pursue passenger-to-freighter (PTF) conversions. Citing increasing demand, Atitech signed an agreement with Israel Aerospace Industries (IAI) last year for Boeing 737-700 and -800 conversion work. Atitech’s role at IAI’s first site in Europe incudes aircraft maintenance and renovation services, converting passenger aircraft to cargo configurations. In addition, it provides training and support in licensing and registration for technicians. It has capacity to convert two aircraft in parallel.

The first converted aircraft, a former Scandinavian Airlines 737-800, was completed in mid-June and was to be delivered to DHL as the lessee at the end of the month. Atitech expects another narrowbody to enter its hangar soon. Lettieri sees Atitech eventually growing further in the PTF segment. “We will continue in this business because I think that the next few years will see a lot of demand in conversion services,” he says.

James Pozzi

As Aviation Week's MRO Editor EMEA, James Pozzi covers the latest industry news from the European region and beyond. He also writes in-depth features on the commercial aftermarket for Inside MRO.