Qatar Airways goes Italian, picks up chunk of Meridiana

Stop me if you’ve heard this one before: A large airline based in the Middle East is taking a significant stake in a struggling Italian airline in hopes of architecting a turnaround. Qatar Airways is now the 49% owner of Meridiana, Italy’s second largest airline.

“We are delighted to formalise this important partnership, which will help increase Meridiana’s competitiveness in the European market.” – Qatar Airways Chief Executive Akbar al Baker

Meridiana is based in Sicily and operates from Sardinia and Milan on a mix of domestic, regional and long-haul routes. The fleet is small – only 16 aircraft – and spans from 150-300 seats. The Qatar stake brings about a fleet refresh for the operation. Qatar Airways has 20 737 MAX aircraft on order with delivery set to start in Q2 2018. That new fleet creates a huge opportunity for the airline, though it is unclear that fleet alone solves the profit problems.

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The transaction completes a deal first indicated over a year ago during the 2016 Farnborough International Airshow outside London. It is unclear why the deal took this long to negotiate, especially given that the LATAM deal was announced the day prior and is far more mature. But here we are.

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On the regional and domestic front Meridiana faces competition from Alitalia, of course, but also strong and increasing pressure from the many LCCs carrying massive loads of beach-seeking tourists to Sardinia. The 737MAX gives the company lower costs and greater range over which to draw those travelers itself, but the competition is not going away any time soon. Except for Air Berlin, but that’s going to be replaced by easyJet and Lufthansa and some of those flights will certainly continue.

The longhaul network does not benefit from the new planes, at least not in an obvious way. Qatar Airways claims its foreign airline investments (currently IAG and LATAM) are strictly financial and that it doesn’t try to change operational behavior. For IAG that seems to have held while for LATAM things are a little closer; Qatar Airways operates a handful of A350s originally delivered to LATAM based on a weaker South America market.

In this case the fleet shift comes in the form of those 737MAX planes Qatar Airways previously planned to use for expansion. Those plans appear waylaid by the economic blockade and political isolation the country faces from its neighbors. Which is not to say that a major stake in a money-losing Italian airline is a smart investment simply to have a place to fly the planes. But it doesn’t hurt.

Header image: Meridiana by Anna Zvereva via Flicr/CC-SA 2.0