May 8, 2019 / 9:05 PM / 6 months ago

Air Italy expects profits 'very soon' despite pilots idled by Boeing crisis

CHICAGO (Reuters) - An Air Italy executive has joined a chorus of global airlines hurt by grounded Boeing 737 MAX jets but expects the airline to be profitable “very soon” and carrying five times as many passengers by 2022.

FILE PHOTO: A Boeing 737 MAX 8 sits outside the hangar during a media tour of the Boeing 737 MAX at the Boeing plant in Renton, Washington December 8, 2015. REUTERS/Matt Mills McKnight/File Photo

“We have MAX pilots on the ground, sitting there doing nothing,” Chief Operating Officer Rossen Dimitrov told Reuters.

Sardinia-based Air Italy, which launched last year, was using three MAX aircraft to service routes to Sharm El Sheikh, Cairo and Dakar before regulators around the world grounded the fast-selling Boeing Co jets following two fatal crashes.

With a fleet of just 13 aircraft, Air Italy has had to lease two Embraer jets and their crew from Bulgaria Air to cover routes heading into the peak summer travel season. Because Air Italy’s pilots and crew are not trained on the Embraer, their work hours have fallen, Dimitrov said.

Air Italy, which also flies non-stop from Milan to five North American destinations including new seasonal routes to Los Angeles, San Francisco and as of this week Toronto, has 1,146 employees.

Larger airlines have warned that the 737 MAX groundings are hitting revenues and costs by hundreds of millions of dollars. [nL5N2270SV

Still, loss-making Air Italy, owned by Italian holding company Alisarda and Qatar Airways, expects to be profitable “very soon,” Dimitrov said. He declined to provide details but said shareholders “are happy” with a five-year business plan it recently shared that puts it on track to carrying 10 million passengers a year by 2022, versus 2.4 million carried so far.

But Air Italy’s U.S. expansion is facing scrutiny by Washington lawmakers who say it may violate a commitment made by its shareholder, state-owned Qatar Airways with a 49 percent stake, not to add new flights to the U.S. market.

The lawmakers argue the U.S. routes may breach a 2018 aviation agreement between the United States and Qatar meant to address U.S. concerns that Gulf airlines are unfairly subsidized by their governments, distorting competition.

Dimitrov dismissed the allegations as “completely false.” Qatar is a minority investor that does not manage Air Italy’s operations, which are fully compliant with European regulation, he said. It does not have a codeshare agreement with Qatar.

The second largest Italian carrier after Alitalia said it is in talks with other international carriers over codeshare deals but declined to comment on possibilities with JetBlue Airways Corp, which plans to break into the low-fare, transatlantic travel market beginning in 2021.

JetBlue last month asked the U.S. government not to restrict Air Italy from flying to the United States on concerns of retaliation on airline agreements by the European Union.

Reporting by Tracy Rucinski; Editing by Lisa Shumaker

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