From banking to starting an airline | Analysis | Airfinance Journal

From banking to starting an airline

  • Commentson this article: 0

The transition from banking to airline chairmanship is no easy task but former banker Marc Bourgade sees an opportunity in Italy with Aeroitalia, a start-up carrier that plans to begin services in the second quarter.

Bourgade has worked in the aircraft finance sector for more than 20 years, having been the chief financial officer of Natixis Transport Finance bank for six years.

As chairman, he has invested equity into the carrier and is the sole owner of Aeroitalia.

The origin of his project dates back from his days as a banker.

“I have loved my time in the banking sector but one of the reasons I left after 20 years of service was the administrative aspect of my job. We had less time to look after our clients because banks have become very regulated. It creates burdens to what we are meant to produce for the bank,” he says.

Bourgade says the “shadow banking” side of the industry is more reactive and flexible.

“This is why I created Flying Solutions in 2016. The objective was to continue serving clients as a consultant and close financing deals like a bank.” Bourgade has closed more than $2 billion-worth of financing deals since then.

“I know the credit risk aspect of airlines as well as management and commercial models that work or not. Before the Covid-19 pandemic, I started to work for an investment fund that looked at acquisition opportunities in Europe. We studied airline business plans for months. This was key to understanding different airline models and markets. Then I realised that Italy has growth opportunities for a new entrant as it is not a congested market, like Spain for instance,” he says.

At the time, Alitalia was up for sale but Bourgade decided to start from scratch. 

“The advantage of starting from scratch,” he says, “is you know the cost aspect of the business. In our case, we start conservatively.”

The company has hired executive Gaetano Intrieri as its chief executive officer. Intrieri is a former adviser to Italy’s minister of transport.

Former Avianca owner, German Efromovich, has also joined the team as a consultant and board member.

“We needed a management team that has experience in aviation, knows the Italian market and understands how an airline functions,” says Bourgade. “We start operations with a break-even objective in our first year of operations.”

He adds: “Aeroitalia will focus on charter operations first because this guarantees revenues from the day we have the AOC.”

Fleet plans
Aeroitalia will have a Boeing 737-800 fleet.

“We looked at the Airbus and Boeing narrowbody products and we selected the 737-800. In my days at the bank, I have always had a good relationship with Boeing,” he says.

Leasing was an obvious choice. Bourgade reveals that Aeroitalia has signed its first 737-800 lease with Macquarie Airfinance.

“The plan is to grow the fleet to six units by one year of operations,” he comments.

But Bourgade has a vision of a mixed fleet of narrowbody and widebody aircraft. Given that traffic recovery in the widebody sector is not anticipated before 2024, starting widebody operations within two years could be risky. However, Bourgade says it is the right time to invest. 

“We have demand for this type of operation but we need to position ourselves on certain routes and markets. Not all routes or markets will recover by 2024 but, with the right product, we could start widebody services in 2023.”

Pre-Covid lease rates were substantially higher than now, he notes, adding that Aeroitalia is seeking aircraft at competitive rates.

He reveals that the carrier has looked at purchasing aircraft, but that export credit-financed assets where the customer has defaulted take time to acquire. “We felt that those repossessed aircraft could be remarketed sooner to save tax payer money.”

Headquartered in Rome, Aeroitalia will perform its first flight immediately after obtaining its AOC, which will be in the very near future.

Setting up an airline in Italy can be challenging but Bourgade says the local authorities have facilitated the process smoothly and, in particular, the Italian Civil Aviation Authority, which has been “extremely professional”.

The carrier will fly international routes but has plans to operate domestically, too. 

Italy is one of the largest exporters in Europe and the business market is very developed. Bourgade expects Aeroitalia to move from its charter services niche and become a more “conventional carrier” within three years.

He adds: “Once we have a track record of operations in Italy we will open the capital to further grow our operations.”

Most Popular

Related Data