Lufthansa Signs Agreement to Acquire 41% of ITA Airways

In a significant development for the ongoing negotiations between the Lufthansa Group and ITA Airways, the Italian Ministry of Economy and the German group have successfully concluded negotiations. The German Group has agreed to a 41 percent stake transaction for €325m of the Italian carrier through a capital increase.

Under the terms of a groundbreaking agreement, the Ministry of Economy and Finance (MEF) has also pledged a capital increase of €250 million to ITA. This injection of funds will directly bolster the company’s financial standing.

Adding another layer to this partnership, the MEF and Lufthansa have crafted a set of options that could potentially pave the way for Lufthansa to acquire the remaining shares of ITA Airways in the near future.

Photo: ITA Airways, Airbus A330-200. Courtesy of ITA Airways.

The agreement will pave the way for Lufthansa to acquire a substantial stake in ITA Airways, eventually taking over the young Italian airline and integrating it into its vast group of European carriers, which include Swiss International Air Lines, Austrian Airlines, Eurowings, Air Dolomiti, and Edelweiss, among others.

Long-Awaited Conclusion

In a momentous development, the long-anticipated agreement between ITA Airways and Lufthansa Group is poised to reach its final stages. The contractual formalities are nearing completion, with the parties eagerly awaiting the imminent conclusion of this transformative deal.

However, the acquisition of the minority stake remains contingent upon the crucial approval of the relevant E.U. authorities, underscoring the significance of regulatory clearance in this transaction.

Photo: Lufthansa Group’s Board of Directors. Courtesy of Oliver Roesler / Lufthansa.

Once the agreement is officially sealed, ITA Airways and the Lufthansa Group are prepared to embark on an immediate journey of collaboration at both the commercial and operational levels. The convergence of their expertise and resources is expected to yield an array of synergistic benefits, invigorating the industry with their combined prowess.

Notably, ITA Airways will assume the coveted position as the fifth network carrier within the esteemed Lufthansa Group’s multi-brand and multi-hub system.

Italy, a critical market outside the German Group’s native strongholds and the United States, assumes a pivotal role in this strategic alliance.

Boasting the third-largest economy in Europe by gross domestic product, Italy’s export-oriented prowess solidifies its standing as a vital hub for business travel. Moreover, as one of the world’s most sought-after leisure destinations, Italy captivates private travelers, further amplifying its significance in the realm of international tourism.

“Today’s agreement will lead to a win-win situation for Italy, ITA Airways, and Lufthansa Group,” said Carsten Spohr, Chief Executive Officer of Lufthansa.”

Photo: Lufthansa Group’s CEO, Carsten Spohr. Courtesy of Oliver Roesler / Lufthansa.

Spohr added that this is “good news for Italian consumers and for Europe because a stronger ITA will invigorate competition in the Italian market. As a young company with a modern fleet, and with its efficient and expanding hub in Rome, ITA is a perfect fit for Lufthansa Group.”

The German Group’s Chiefs remains optimistic and sees big potential in the young Italian airline. “In Milan, ITA Airways serves a strong catchment area which also offers potential for growth. As part of the Lufthansa Group family, ITA can develop into a sustainable and profitable airline, connecting Italy with Europe and the world. At the same time, this investment will enable us to continue our growth in one of our most important markets,” he said.

E.U. Antitrust Approval

Now that the agreement between the German group and the Italian airline has been reached, it will now undergo scrutiny by the E.U. Antitrust Chamber, which could require up to four months.

Both parties have already been informed of forthcoming requests, including evaluating corrective measures necessary to prevent monopoly or near-monopoly situations.

Photo: Courtesy of ITA Airways

One such requirement is the transfer of slots in several European airports, including Milan-Linate and Rome-Fiumicino—the Italian airline’s two main operating centers.

When will Lufthansa take over?

Once the E.U. Antitrust Chamber’s green light is obtained, Lufthansa can take over the management of ITA Airways.

As noted by Berberi, the German group will initially focus on optimizing the Italian airline’s network, enhancing its commercial synergies by integrating it into its vast network of airlines and implementing cost-saving measures.

Photo: Courtesy of Arkin Si / Unsplash

ITA Airways, which currently belongs to the SkyTeam alliance, will switch to Lufthansa’s Star Alliance once the integration is complete. However, the initial challenge will be to address the airline’s financial losses, which continue to mount rapidly.

Since its launch in October 2021, the Italian carrier incurred a loss of nearly €148 million in the first two and a half months, escalating to €486 million in 2022. As a result, the German group will try to revert this negative trend as soon as it takes control of the Italian airline’s management.

New Airbus A330neo, New U.S. Routes

As the Lufthansa-ITA Airways negotiations build up, the Italian airline eagerly anticipates the arrival of its first Airbus A330neo aircraft in Rome by the end of May.

The first aircraft completed its inaugural flight on April 28 in Toulouse, France.

Photo: ITA Airways, Airbus A330-900neo. Courtesy of ITA Airways.

The maiden route for the A330neo will connect Rome with Miami. Following this inaugural journey, ITA Airways plans to expand its operations to include destinations such as New York-JFK, Sao Paulo, and Delhi as additional A330neos join the fleet.

In addition, starting in June, ITA Airways will launch flights to Washington, D.C., with an initial frequency of five weekly flights. Later in August, the service will be further intensified, offering daily flights to meet the rising travel demand.

Moreover, ITA Airways will inaugurate its Rome-San Francisco services on July 1, initially offering three weekly flights, which will be increased to four flights per week starting August 2.

FCO Connect: Air + Rail in Rome

In collaboration with Aeroporti di Roma and Trenitalia, ITA Airways is introducing a pioneering intermodality project called FCO Connect.

The newly launched ‘train + airplane’ product is designed to streamline the travel experience for passengers, offering a combined ticketing and check-in service at dedicated counters at the Rome-Fiumicino Airport railway station.

Photo: Courtesy of Aeroporti di Roma

Passengers traveling on Frecciarossa or Leonardo Express trains and continuing their journey on international and intercontinental flights operated by ITA Airways—excluding the USA and Israel—now have the convenience of checking in and depositing their baggage directly at Fiumicino station. They can collect their belongings at their final destination, eliminating the need for additional check-in procedures at the airport.

The check-in service at the railway station within Fiumicino Airport will be introduced on an experimental basis, exclusively during the summer. This trial period aims to assess the feasibility and effectiveness of the service while gathering feedback from passengers to optimize the intermodal travel experience further.

FCO Connect hopes to provide passengers with a more efficient journey by seamlessly integrating train and air travel. This innovative approach not only simplifies the travel process but also contributes to a more sustainable and environmentally friendly mode of transportation.