Lufthansa won European Union approval to buy a stake in Italy’s state-owned carrier ITA Airways after last-ditch concessions eased high tensions between Rome and Brussels.
Carsten Spohr, Chief Executive Officer of Deutsche Lufthansa AG, says: “The approval from Brussels 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.”
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Lufthansa Group, the Italian Ministry of Economy and Finance (MEF) and ITA Airways have expressly welcomed the EU Commission’s approval under competition law. With this clearance of the competition authority, the way is now clear for the acquisition of a minority stake of 41 percent in ITA Airways (Italia Trasporto Aereo S.p.A.) and the subsequent acquisition of the remaining shares by Deutsche Lufthansa AG for a capital contribution of 325 million euros, which was already agreed in May 2023. The investment will be completed through a capital increase. The transaction is expected to close in the fourth quarter of 2024. This requires both the prior implementation of the remedies negotiated 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 MEF and can be exercised from 2025 at the earliest.
Following the closing, ITA Airways is to become the fifth network airline to be closely integrated with Lufthansa Group while keeping its brand name ITA Airways. As part of the multi-hub, multi-airline and multi-brand system successfully established by the Lufthansa Group, the Italian airline will utilize numerous synergies, for example in world-wide sales, the loyalty program Miles & More or also in aircraft and fuel purchasing.
This will strengthen and further develop the economic situation of ITA Airways. Italy will become the Lufthansa Group’s fifth “home market”. It will then be the Lufthansa Group’s second largest market in terms of revenue after Germany and the USA. Italy is already the second most important market for the company outside its home markets after the USA. In terms of gross domestic product, Italy is the third largest economy in Europe with a strongly export-oriented economy and one of the most popular vacation destinations worldwide.
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Lufthansa Group and ITA Airways are jointly planning a swift integration ITA Airways with its almost 5,000 employees will make the corporate culture of the Lufthansa Group even more international and diverse. Rome-Fiumicino will become the Lufthansa Group’s sixth and geographically southernmost hub. Last year, the airport was awarded with five Skytrax stars.
Immediately after the closing, the route networks are to be linked with each other through code sharing so that customers can combine the airlines’ offers. This will create over 1,000 new transfer options, creating many more options to destinations in South America, North Africa and the Middle East in particular. ITA Airways will also strengthen competition in Italy, which is currently characterized by a superior position of low-cost airlines.
ITA Airways already focuses on quality and a premium approach with an Italian service culture. Members of its existing loyalty program “Volare” will also be able to collect or use their miles with Miles & More from the first day after the closing. In addition, the respective lounges will be mutually accessible. ITA Airways is aiming to join the Star Alliance in the near future. Commercial processes, IT systems and purchasing processes will be harmonized as quickly as possible in order to exploit the numerous synergy effects.
Carsten Spohr says: “The acquisition of ITA Airways strengthens the internationalization of the Lufthansa Group. We offer our guests a significantly greater choice of connections and destinations, and with the 5-star hub in Rome we are also extending our premium offering and better connecting strategic future markets south of the equator to our network. Despite the comprehensive and far-reaching concessions, the investment in ITA Airways strengthens the 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. ITA Airways will support us in further expanding our position as Number One in Europe.”
The integration of ITA Airways into the airline network of the Lufthansa Group is to start with the closing. The approval of the authorities enables the cooperation between ITA Airways and Lufthansa Group on a commercial and operational level from the date of closing of the transaction. Until then, both companies will continue to act in competition. Following intensive negotiations with the European Commission, the parties have agreed on a package of concessions. This essentially includes the transfer of slots at Milan-Linate Airport to a competitor in short-haul traffic. In the “neighboring traffic” between Italy and the Lufthansa Group’s existing home markets, this competitor will take over single routes on which Lufthansa Group Airlines and ITA Airways still operate today as competitors. Additional feeder flights from Rome to hubs of European competitors will also ensure improved competition on long-haul routes from Rome to North America.
ITA Airways was founded in November 2020, started its operations on 15 October 2021 and currently has around 4,860 employees. Based in Rome, the airline carried almost 15 million passengers last year and has a modern fleet of 96 Airbus aircraft, including 23 long-haul and 73 short-haul aircraft. The hub in Rome offers ideal conditions for expanding the joint route network towards Africa and Latin America, thus providing customers with improved connections to the southern hemisphere. ITA Airways currently serves a total of 69 destinations.
