Italian Government Confirms Nearly $800M in Piaggio Contracts

Financially beleaguered Piaggio Aerospace is getting a boost from the Italian Defense Ministry, which confirmed commitments amounting to about €700 million ($798 million). They include the acquisition of nine new Avanti Evo aircraft, the upgrade of 19 current Avantis, engine maintenance, and logistics support. In addition, the government reaffirmed plans to pave the way for the certification and acquisition of at least one P.1HH Hammerhead UAS system (two aircraft and one ground station) as a testbed.

The Italian Defense Ministry confirmed the commitments during a meeting on June 20 in Rome that included representatives of the Italian government, Piaggio Aerospace’s extraordinary receiver, local authorities from the Liguria region, and the Piaggio Aerospace union. Last week’s confirmation followed the government’s agreement in April to an initial plan that outlined the contracts and enabled the Italian manufacturer to restart production. Since that time, Piaggio, which entered receivership late last year, has sought bids for the sale of the company, which reportedly generated more than three dozen expressions of interest. The company is now asking for more detailed bids.

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By June, the company will present a proposal and officially invite offers to purchase it.

Included in the €700 million tally are two contracts valued at €33 million—already signed and funded—covering maintenance of the engines of the Italian armed forces’ fleet. Two more contracts totaling €167 million for the work are anticipated by the end of the month. Contracts valued at €260 million for the Avanti Evo orders and Avanti upgrades, meanwhile, are anticipated shortly “and in any case by the end of the year,” the company said. A €96 million logistics contract is anticipated by the end of September.

As for the Hammerhead program, the government plans to finalize the parliamentary approval process by mid-July for the certification and acquisition of at least one system, saying it will enable the company to proceed with design activity and preserve “company know-how.” That work represents an investment of €160 million.

“The definition of the operational needs of the Italian armed forces and the availability of the relevant budgets, communicated yesterday by the Italian government in Rome, allows the company to restart,” said Vincenzo Nicastro, extraordinary receiver of Piaggio Aerospace. “The timetable announced, which foresees the signing of the first new contracts as early as the end of this month, will support the company's commitment to regaining market share in all the sectors in which it operates.”

While adding “there is still a lot to do,” Nicastro said, “I believe that—just six months after the start of the extraordinary receivership—we are moving in the right direction. Our goal is to be in a good position after the summer, when the official tender for the sale of Piaggio Aerospace will hopefully start.”