Milan-based Air Italy is to cease operating and go into liquidation following a decision by its shareholders, including Qatar Airways.

Air Italy was created from former Italian regional carrier Meridiana in late 2017 following a restructuring which saw Qatar Airways take a 49% stake – the maximum allowed under EU airline ownership rules.

The carrier began operating in 2018, using Milan Malpensa airport as a hub and offering regional flights and long-haul services to the US, India, the Maldives and Africa.

It grew to become the country’s second largest carrier and a launch customer for the Boeing 737 Max aircraft which has been grounded since last March.

However, Air Italy never made money – losing €164 million in 2018 and €200 million in 2019.

The carrier also ran into objections from major US airlines which accused Qatar Airways of using Air Italy to expand in the US market, contravening a US-Qatar open-skies agreement.

The decision to go into liquidation was announced on February 11 following a shareholders’ meeting.

Parent company AQA Holding was 49% owned by Qatar Airways and 51% by former Meridiana owner, Alisarda – set up in the 1960s to operate charter flights between Olbia in Sardinia and cities in Italy.

The company was registered in Sardinia.

Flights will cease on February 25, with passengers booked beyond that date told to request refunds.

In a statement, Qatar Airways said it had been willing “to play its part in supporting” the airline.

Qatar said: “Since the acquisition of a minority stake in Air Italy, Qatar Airways has strongly believed in the company and its potential, supporting management’s proposed business plan.

“Despite our minority shareholder’s role, Qatar Airways has provided all possible support to Air Italy, from releasing aircraft from our fleet and ordering new aircraft for Air Italy to backing management choices and injecting capital and investment.

“Qatar Airways has reaffirmed its commitment, as a minority shareholder, to continue investing in the company [and] was ready once again to play its part in supporting the growth of the airline.”

But this “would only have been possible with the commitment of all shareholders”.

Italian flag carrier Alitalia remains in administration while continuing to operate as the Italian government seeks investment for the airline.