The European Commission on Wednesday announced that it has approved Lufthansa Group’s planned acquisition of 41 per cent stake of Italian flag carrier and Alitalia successor ITA Airways.
In May 2023, Lufthansa Group’s parent company Deutsche Lufthansa AG agreed to pay €325 million for a minority stake in the Italian airline, with Italy’s Economy and Finance Ministry (MEF) also contributing €250 million as part of the capital increase.
Initially, the EU Commission had concerns that the transaction could possibly negatively impact competition on short-haul and long-haul routes connecting Italy with Europe, the United States, and Canada.
It was also concerned that it could have created or strengthened ITA Airways’ dominant position at Milan-Linate Airport, making it harder for rivals to provide passenger air travel to and from the airport.
The EU Commission has now approved the move under the EU Merger Regulation, allowing joint control of ITA Airways between Lufthansa Group and the MEF.
This was done through a number of proposed remedies, including commitments for short-haul and long-haul routes, making it available for rival airlines to have the necessary assets to enable them to start non-stop flights between Rome or Milan and certain European airports.
Deals will also be made with rivals for interlining agreements or slot swaps, allowing airlines to coordinate with one another on certain aspects of travel.
Lufthansa Group and the MEF will also transfer take-off and landing slots at Milan-Linate Airport to competing airlines for short-haul routes.
The EU Commission stated that these commitments “fully address the competition concerns” that were identified, and thus, the modified transaction “would no longer raise competition concerns.”
The approval is condition upon full compliance with the remedies offered by Lufthansa and the MEF, the EU Commission stated.
In a statement on Wednesday, all three involved parties welcomed the approval, with the way now being clear for the acquisition.
The transaction is expected to be completed in the final quarter of 2024, with it requiring both the prior implementation of remedies negotiation with the EU Commission and the approval of other competition authorities outside the EU.
Options for the acquisition of the remaining shares in ITA Airways have been agreed between Lufthansa Group and the MEF and can be exercised from 2025 at the earliest.
The EU Commission has set a maximum period of four months from the date of the decision to fulfil the conditions.
Lufthansa Group's major airline partners
Once the deal is closed, ITA Airways will become the fifth network airline to be closely integrated with Lufthansa Group, while retaining its brand name ITA Airways. Italy will thus become Lufthansa Group’s fifth home market and the second largest market for the group in terms of revenue.
Antonino Turicchi, Chairman of ITA Airways, said that once the conditions are met, the Italian airline “will be able to strengthen itself thanks to Lufthansa’s capital investment and achieve synergies by becoming part of one of the largest aviation groups, thereby ensuring greater connectivity for the country.”
Deutsche Lufthansa AG CEO Carsten Spohr remarked that the approval is “excellent news for ITA Airways and Lufthansa, and especially for all passengers flying to and from Italy.”
“We look forward to welcoming ITA Airways and its outstanding employees as a new member of our airline family very soon. The decision is also a clear signal for strong air traffic in Europe, which can successfully assert itself in global competition,” he continued.
Lufthansa Group is the flag carrier of Germany, and is also one of the five founding members of Star Alliance, the world’s largest airline alliance. Aside from operating flights under its own brand, Lufthansa Group also owns Austrian Airlines, Brussels Airlines, Discover Airlines, Eurowings, and SWISS.
Lufthansa also owns a number of aviation-related companies, including aircraft maintenance, repair and overhaul firm Lufthansa Technik, which has a base in Malta.
Mr Spohr affirmed that the acquisition of ITA Airways strengthens the internationalisation of Lufthansa Group.
“Despite the comprehensive and far-reaching concessions, the investment in ITA Airways strengthens Lufthansa Group’s position in global competition. We will make ITA Airways a strong and successful part of our company and thus secure its future as an international airline and strong brand,” he said.
ITA Airways was founded in November 2020 and started its operations on 15th October 2021 and currently has around 4,860 employees. It is based in Rome and carried almost 15 million passengers in 2023 with a fleet of 97 Airbus aircraft.
It recently signed a codeshare agreement with Malta’s new national carrier KM Malta Airlines, connecting the networks and flights of the two airlines.
At the time of writing, ITA Airways has two flights connecting Malta to Rome Fiumicino and Milan-Linate.
