AIREUROPE SUBSIDIARY OF BANKRUPT VOLARE GROUP

UNCLAS ROME 004915

SIPDIS


C O R R E C T E D C O P Y (PARAS RENUMBERED)

EB/TRA FOR LAURENCE JONES AND MEGAN WALKLET
FAA PASS TO ROY BARNETT (NEW YORK FIELD OFFICE),MIKE E.
DANIEL (AFS-50),AIA-1, AIA-300
AMEMBASSY BRUSSELS PASS TO FAA REP. PAUL FELDMAN

E.O. 12958: N/A
TAGS: EAIR IT AVIATION FAA
SUBJECT: AIREUROPE SUBSIDIARY OF BANKRUPT VOLARE GROUP
GRANTED PROVISIONAL OPERATING LICENSE

Italy Shuts Down Volare Group Airlines.
--------------


1. On November 19, Italian authorities shut down the
insolvent Volare Group Airlines, including the regional
budget carrier VolareWeb and the charter carrier AirEurope.
On December 27, the National Civil Aviation Authority (ENAC)
granted AirEurope a provisional license to commence
international flights immediately, valid through May 6, 2005.
The provisional license was granted upon completion of a
satisfactory aircraft inspection and subsequent issuance of
the Certificate of Airworthiness (COA) for the sole aircraft
remaining in AirEurope's possession.

Flights Authorized, But More Delays.
--------------


2. AirEurope experienced delays in commencing flights, as
Volare Group also had to negotiate a financial agreement with
Sea, Malpensa Airport administrator and Volare Group
creditor, before any Volare aircraft would be permitted to
land at Malpensa. (Volare Group has also made a similar
arrangement with creditor and Rome Fiumicino airport
administrator ADR.) With the provisional license, AirEurope
hopes to serve Mauritius, Zanzibar and Dominican Republic
destinations from Milan Malpensa and Rome Fiumicino airports.
ENAC contacts report that for now, AirEurope has no intent
to fly to the United States.

USG Agencies Are Monitoring Safety/Security Certifications.
--------------


3. Post's Federal Aviation Administration (FAA) rep reports
FAA is monitoring the situation and could revoke AirEurope's
U.S. safety certifications if ENAC were to revoke the Air
Europe aircraft certificates of airworthiness later.
(Comment. Post has no information that ENAC intends to
revoke any certificate.) The FAA decision has been pending
while a workout plan for Volare Group is completed. If ENAC
retains all safety certifications for AirEurope aircraft, the
FAA would likely maintain U.S. certifications. As for the
Transportation Security Administration (TSA),post's TSA rep
reports that the Department of Homeland Security,s regional
International Primary Safety and Security Inspector has
decided to retain security certifications for the next six
months to allow Volare Group time to restructure.


4. Post will continue to monitor Volare developments and
will report more details septel as they become available.


SEMBLER


NNNN
2004ROME04915 - Classification: UNCLASSIFIED