They led by 23s at the second mark, with the Italians noticeably quicker than they had been in the round robin contests, where they sometimes trailed in over five minutes behind.
It looked like, after the gear breakages yesterday (when the Italians had daggerboard problems) and Team NZ's spectacular nose dive, that order would be restored. Emirates Team NZ seemed to be continuing their plain sailing towards a date with Oracle Team USA in the America's Cup match.
But they slowed uncertainly on the way to the third gate with the hydraulics cutting out. At the time, they had a 400m lead over the Italians and were demonstrating some sizzling speed upwind, their hulls not quite fully foiling but hulls dancing lightly over the chop.
Aas they approached the third mark, the increasing lead turned into diminishing hopes.
The hydraulics failed, the boat halted and the Italians, scarcely believing their luck, swooped past - ironically pulling off a good turn to speed away while the helpless Kiwis sat watching.
ETNZ then gave up on that race, instead readying the yacht for the second race of the day - scheduled for 9.15am NZT. But that race did not go ahead because the wind exceeded allowable limits.
"It's not the way we would like to win points but I was really happy with the way were sailing," said Luna Rossa helmsman Chris Draper.
"We had a problem with the hydraulics and you can't tack or gybe without them," said ETNZ skipper Dean Barker. "It's the nature of these boats unfortunately - there are so many things that can go wrong and today it was a problem with the hydraulics.
"We have been very fortunate so far not to have had many issues until today but I guess this just reinforces the need to be 100 per cent."