German airline group Lufthansa reached an agreement with the Italian government on Thursday (25 May) for the acquisition of national carrier ITA Airways following months of drawn-out negotiations.
The takeover deal, pending EU Antitrust approval, will see the European aviation giant acquire an initial 41 per cent stake in ITA Airways for €325 million. The Italian treasury will also contribute a final €250 million instalment of public funding to the state-owned carrier, which had been previously authorised by the EU.
The second phase of the agreement will see Lufthansa pay another €325 million in 2026-2027 for an additional 49 per cent stake if agreed financial targets are met, according to reports by Italian newspaper Il Corriere della Sera. A final phase, likely in 2028, will see Lufthansa pay some €80 million for the remaining 10 per cent of the Italian airline.
In a statement, Lufthansa said it plans to “immediately” begin “commercial and operational cooperation”, with ITA set to “benefit” from synergies within the airline group, which includes Lufthansa German Airlines, Swiss, Austrian Airlines, Brussels Airlines and Eurowings.
Lufthansa CEO Carsten Spohr said the agreement is a “win-win” situation for Italy, ITA Airways and Lufthansa Group, and “good news” for Europe because “a stronger ITA will invigorate competition in the Italian market”.
“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.
It is expected that ITA will start codeshare flights with the Lufthansa group in the coming weeks, according to Il Corriere della Sera, and will then join the Star Alliance group of carriers as well as Lufthansa’s transatlantic joint venture with United Airlines and Air Canada.
Lufthansa plans to increase revenue at ITA from an expected €2.5 billion this year to €4.1 billion in 2027. The nascent carrier, which replaced legacy brand Alitalia in 2021, recently reported a loss of €486 million for the 2022 financial year.
According to reports, Lufthansa intends to expand ITA’s fleet from 71 to 94 aircraft by 2027 and increase the number of employees to 5,500. The carrier will become part of Lufthansa’s multi-hub strategy that will establish Rome Fiumicino as one of its intercontinental hubs, particularly for flights to Latin America, Africa and Asia, while Milan Linate and Malpensa have also been flagged as having “potential for growth”.
The airline group also expects to expand intermodal offerings across Italy following a recent agreement with Italian state rail company Ferrovie dello Stato Italiane.
Lufthansa lost an initial bid to acquire the Italian airline in 2022 after the previous Dragi government favoured an offer by a consortium made up of Delta Airlines, Air France-KLM and US investment fund Certares. However, when the current Meloni government took office last October, media reports suggested that the Ministry of Economy and Finance had recommenced talks with Lufthansa over ITA and the German group formally relaunched its bid in January 2023.