Lufthansa and the Italian government have reached a final agreement on the sale of ITA Airways after resolving price disputes. Regulatory approvals have been submitted to the European Commission, with confidence in a positive outcome. The partnership includes conditions to ensure industry competition, such as transferring airport slots. Lufthansa aims to strengthen its presence in Italy, the EU’s third largest market, following previous unsuccessful attempts to invest in Alitalia. Final approval is imminent, paving the way for this significant collaboration.
Final Agreement Between Lufthansa and ITA Airways
After navigating through some last-minute challenges, Lufthansa and the Italian government have successfully resolved their differences regarding the sale price of ITA Airways. This development paves the way for a long-anticipated partnership between the two entities.
Regulatory Approvals and Future Prospects
The Italian Ministry of Economy announced on Monday that the necessary agreements concerning regulatory remedies have been submitted to Brussels within the required timelines. The ministry expressed confidence that the European Commission will grant final approval for the transaction, noting that the economic terms remain unchanged from the agreement reached in May 2023.
The collaboration between the German airline and the Italian government met the midnight deadline to present the remedy package to the European Commission, aimed at maintaining competitive practices within the industry. Italian Economy Minister Giancarlo Giorgetti signed the negotiated document, which includes the transfer of certain airport slots to other airlines as a condition for maintaining competition.
According to government sources, “Italy is not selling off its airline,” emphasizing the commitment to preserving the national carrier. Following a stalemate concerning the sale price, Giorgetti had previously withheld his signature from the remedy package, unlike Lufthansa. When queried about a potential meeting with Lufthansa CEO Carsten Spohr, Giorgetti indicated that it would be “appropriate.”
In July, Brussels had provided a conditional approval for the merger, stipulating that both airlines must impose restrictions on specific routes to ensure competitive integrity. Initially, the deadline for submitting the final documents was set for November 4, later extended to November 11. The European Commission initiated a “thorough investigation” in January, expressing concerns about possible competition reduction on various short and long-haul routes to and from Italy.
Lufthansa’s investment is expected to enhance its access to the Italian market, which ranks as the third largest in the EU, while simultaneously providing ITA with a robust shareholder base. The European Commission had given its blessing for ITA’s establishment in 2021 and sanctioned €1.35 billion in public funding, contingent on the airline becoming self-sustainable.
The journey toward this agreement has not been without its hurdles. Lufthansa’s pursuit of ITA Airways follows two unsuccessful attempts to invest in Alitalia in 2009 and 2019. In January 2022, Lufthansa was a contender along with the Italian-Swiss shipping company MSC, but was ultimately outbid by the American investment fund Certares. Certares’ bid, in collaboration with Air France-KLM and Delta Air Lines, was initially favored by former Prime Minister Mario Draghi, but was later set aside by his successor, Giorgia Meloni, in favor of Lufthansa.
With the final obstacle being the protracted negotiations with the European Commission, Lufthansa and ITA Airways are now on the brink of receiving the final verdict that will shape the future of this significant airline partnership.