By Jonathan Saul, Elisa Anzolin and Francesca Landini
LONDON/MILAN, Feb 14 (Reuters) – Sixty-five years after Aristotle Onassis founded Greek company Olympic Airways, another maritime entrepreneur is planning to take off – this time in Italy, where Gianluigi Aponte’s MSC has its sights set. the successor company to Alitalia.
The 81-year-old, nicknamed ‘The Captain’ after building his shipping empire from a single ship, hopes to start an air cargo and passenger business to integrate with MSC’s ocean freight and cruise operations .
But there are big challenges.
Alitalia stumbled for years, with the Italian government spending around 10 billion euros ($11 billion) on rescue efforts before the airline’s slimmed-down relaunch as ITA Airways last year.
This means that Rome is required to monitor any deal very closely.
What looks good on paper may not look good in practice.
“Ocean and air freight are two modes of freight transportation with more differences than similarities,” said Peter Sand, chief analyst at air and ocean freight rate benchmarking platform Xeneta.
“From a purely commercial point of view it makes much less sense, even if MSC runs a cruise business, the synergies they can derive from buying the former Alitalia cannot be that great.”
But what MSC has in its favor is scale and resources.
A global supply chain crisis has led to record multi-billion dollar profits for the world’s largest shipping companies, such as privately held MSC, giving them the firepower to think longer term about the way to develop their business.
‘TRANSFORMATIONAL OPERATION’
MSC, also known as Mediterranean Shipping Company, is already the world’s largest container shipping company in terms of capacity, having overtaken Maersk. It is also the No. 3 cruise liner in the world and is expected to become the second largest around 2025 when the cruise ships on order arrive.
In December, MSC launched a €5.7 billion bid for Vincent Bolloré’s African logistics business, making the bid for ITA relatively modest by comparison.
MSC, headquartered in Switzerland, is expected to make an offer of around 1.2-1.6 billion euros for ITA and is ready to pay cash, a trade source told Reuters, speaking on condition of anonymity. .
It has also teamed up with an experienced airline partner in Germany, Lufthansa.
Last month, the two companies said they wanted to buy a majority stake in ITA and asked for a 90-day exclusivity period to study the deal.
The trade source said MSC intended to use Lufthansa as a commercial operator with at most a minority stake in ITA, with MSC in front of the deal and able to pay for the purchase in full.
The plan is for MSC to use its unique position with assets in logistics, ports, ocean freight as well as its cruise and passenger travel businesses to create a platform to pick up more business and build on cargo and passenger aviation trade.
“This is a transformational transaction (for MSC), it’s not just about the passenger business,” the source said. “Immediate profit is expected from the freight logistics business.”
The kudos for owning a business known as the Pope’s Airline is an added bonus.
For Lufthansa, the deal could increase its market share in Italy for passenger flights and secure more flights to its hubs elsewhere in Europe. Its freight subsidiary Lufthansa Cargo could also be part of the expansion.
Lufthansa declined to comment.
FACE-TO-FACE
So far, the Italian government has reacted cautiously.
Before making a decision on exclusive talks, the Treasury wants to see if there are other potential buyers for ITA and what they might offer, a government source told Reuters.
Economy Minister Daniele Franco officially launched the process of finding a partner for ITA on Friday, saying the government would retain a minority stake initially.
ITA, which launched on October 15, has its hub at Rome Fiumicino Airport and holds majority take-off and landing rights at Milan Linate Airport. It has 52 planes, less than half of Alitalia’s and only four dedicated to freight, and around 2,300 employees compared to nearly 11,000 for Alitalia in 2019.
If the deal goes ahead, MSC will face other container competitors, such as Denmark’s Maersk, which bought airfreight company Senator International last year to bolster its airfreight business.
French CMA CGM, the world’s No. 3 container company, launched its own air cargo business last year.
Unlike the late Onassis, who was one of the world’s most famous men, the low-profile Aponte operates in a low-key fashion.
In an unexpected move in 2019, MSC hired Soren Toft from Maersk, who officially started as Managing Director of MSC in December 2020 to work alongside Aponte senior and his son Diego Aponte, who is the group chairman.
“They realized they wanted to keep growing and growing and needed to bring in outside talent,” a maritime source said.
“At the same time, everything stops and ends with the family.”
ITA’s offer is not the first time that Gianluigi Aponte has targeted the Italian flag carrier.
In 2008, he was part of a private consortium that hoped to buy Alitalia, but he left the project a few months later, partly for lack of a clear industrial strategy.
Others related to shipping have also ventured into airlines. Stelios Haji-Ioannou, from a family of shipowners, founded the low-cost company easyJet in 1995.
On the other hand, the German liner Hapag Lloyd has chosen not to engage in air freight.
“We are certainly not the subject matter experts and many of our customers will submit their air and sea freight separately,” Hapag managing director Rolf Habben Jansen said during a virtual press conference on February 7.
“I’m not saying their (other container lines) strategy isn’t valid, we’ve chosen not to go.”
($1 = 0.8782 euros)
(Additional reporting by Ilona Wissenbach in Frankfurt and Giuseppe Fonte in Rome Editing by Keith Weir and Mark Potter)
(c) Copyright Thomson Reuters 2022.
