Meridiana Fly to merge with Air Italy

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Meridiana Fly is to acquire fellow Italian carrier Air Italy for almost €90 million ($127.3 million) in a deal that will see the two companies merge their operations to form a combined airline focusing on the Sardinian and mainland Italy market.

The merged carrier will be headed by Air Italy founder Guiseppe Gentile, while Meridiana Fly chief executive Massimo Chieli is to resign from the company.

Meridiana's board today approved the acquisition of the entire share capital of Air Italy Holding, the parent company of Air Italy, from Marchin Investment, Pathfinder and Zain. Meridiana Fly's controlling shareholder is the Aga Khan Fund for International Development.

The purchase price is €89.9 million plus a variable earn-out of up to €7.25 million. If the deal is approved, Meridiana Fly will launch two capital increases amounting to a total of about €231 million.

The plan is for Meridiana to eventually reduce its shareholding to 41%, while Air Italy Holding shareholders will be assigned a 37% stake.

"The new group will retain its strategic focus on Sardinia and will consolidate its position in the main Italian markets, offering both scheduled and charter services," said Meridiana Fly in a statement. The combined carrier will have revenues "in excess of €800 million", it added.

The merged carrier will operate a fleet of 35 aircraft, "including Airbus, Boeing and MD-80 aircraft".

Air Italy currently operates 12 aircraft, according to Flightglobal's ACAS database. This includes three Boeing 737-300s, one 737-400, three 737-700s, one 737-800, two 767-200ERs and two 767-300ERs.

Meridiana Fly operates a fleet of 35 aircraft, including four Airbus A319s, 12 A320s, three A330-200s, one ATR-42-300, nine Boeing MD-82s and six MD-83s.

Sardinia will represent "the core business" of the combined carrier in terms of scheduled operations, together with the Italian cities of Verona, Turin and Naples. It will also offer "selected connections" to Milan Linate, Rome Fiumicino, Catania and Bari.

The charter side will focus on Milan Malpensa, Bologna, Rome Fiumicino and Verona, and will offer flights to East Africa, the Indian Ocean, the Caribbean, South America and various Mediterranean countries.

The combined carrier's general headquarters will be at Olbia Airport, while some operating activities will be based at Milan Malpensa.

Meridiana Fly has been restructuring its operations in light of the economic downturn. This has included "the exit from non-strategic markets [and] the discontinuation of non-strategic routes".

Meridiana merged with Eurofly in 2010 to form Meridiana Fly.

Air Italy launched charter operations in 2005 from Milan Malpensa and later branched into short-haul scheduled operations. It has since launched routes to East Africa, South America and the Caribbean.