ROME – Italy-based Piaggio Aerospace has asked the Italian government to be put into receivership due to “the state of insolvency of the company,” with unions and politicians blaming delays in an expected drone order from the Italian Air Force.

In a statement released on Thursday, the historic Italian firm said, "The prolonged uncertainty and present market conditions make the company no longer financially sustainable.”

Piaggio Aerospace is owned by Mubadala Development Company, an Abu Dhabi-based strategic investment and development company.

In 2016, the United Arab Emirates signed to buy eight P.1HH aircraft, dubbed the Hammerhead, an unmanned variant of the firm’s P-180 business aircraft which flies with two pusher propellers.

The company has planned to make its first delivery to the UAE by year's end. Italy had originally planned to be the launch customer for the Hammerhead, but as the UAE order went ahead, Rome decided it wanted a longer-endurance version, leading to the development of the P2.HH.

The Italian drone orders were expected to help keep the company in business as orders for the P.180 slipped.

Earlier this year, Italy’s ministry of defense sent an acquisition request to the Italian parliament’s defense commission for 20 P2.HH drones, costing a total of €766 million ($874m).

The request was not voted on by the parliamentary commission since it arrived too close to Italy’s March 4 election, which saw Italy’s incumbent center-left government defeated before a populist coalition took office in June.

The program however received launch funding in this year’s defense budget, and at the time of the election, the head of the commission, Francesco Saverio Garofani, said the order would proceed without a commission vote.

Instead, the program has stalled, and the new parliament has yet to vote on it amid pressure by the coalition government to make cuts in defense spending.

Officials in Italy are also concerned that the P2.HH will overlap with the Euromale drone that European partners, including Italy, are now developing.

Meanwhile, Piaggio Aerospace’s finances grew more parlous, leading to the Thursday decision to ask the government to go into special administration.

Italian union FIM-CISL blamed Piaggio Aerospace’s plight on the government’s delay in ordering the drone and asked the government to find new investors to save the firm while pushing the drone order through.

The Democratic Party, which was voted out of government in March, accused the new government of “being unable to take a decision in all these months on the €766 million acquisition of the P2.HH.”

Tom Kington is the Italy correspondent for Defense News.

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