Well it seems the dance has been done, and ITA Airways has a new partner – with Lufthansa Group opening its wallet to take a share in the airline.
Deutsche Lufthansa AG reached an agreement with the Italian Ministry of Economy and Finance (Ministero dell’Economia e delle Finanze, MEF) to acquire a minority stake in the Italian national carrier ITA Airways (Italia Trasporto Aereo S.p.A.).
Lufthansa will obtain a 41 per cent stake in ITA for EUR 325m.
The MEF has also committed to a capital increase of EUR 250m into ITA as part of the agreement.
In addition, the MEF and Lufthansa agreed on options to enable a potential acquisition of the remaining shares by Lufthansa at a later date. The purchase price for the remaining shares will be based on the business development of ITA Airways.
The move is subject to contracts being finalised and approved by the appropriate authorities.
Once this is complete, ITA Airways and Lufthansa Group are expected to immediately start their cooperation at a commercial and operational level.
ITA Airways once integrated will become the the fifth network carrier in Lufthansa Group’s multi-brand and multi-hub system. Italy represents the most important market outside the Group’s home base countries and the United States. For Lufthansa Group it’s a chance to grow its footprint in the aviation industry after previous attempts failed.
41% of what…?
Lets backpedal a bit. ITA Airways was founded in November 2020 out of the ashes of Alitalia.
The airline has approximately 4,000 employees today, flying a fleet of 66 Airbus aircraft, connecting to 64 destinations: 21 domestic, 33 international and 10 intercontinental routes.
Its primary base is in Rome, with the airline flying more than 10 million passengers per year.
Planned Operation
As part of Lufthansa Group, ITA will remain a standalone airline with its own management and strong brand identity – in line with Lufthansa Group’s successful multi-hub, multi-brand and multi-AOC strategy (such as SWISS and Austrian Airlines).
At the same time, ITA can benefit from synergies of the Group, such as access to the partner network, central revenue management and the use of Lufthansa Group’s global sales and marketing channels.
In Quotes
Carsten Spohr, Chief Executive Officer of Deutsche Lufthansa AG says:
“Today’s agreement will lead to a win-win situation for Italy, ITA Airways and Lufthansa Group. And it 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. In Milan, ITA 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.”
A chance to grow out of Italy
The Italian market has been something Lufthansa Group has been trying to crack for some years, with a regional carrier (Air Dolomiti), as well as the failed attempt to establish a Lufthansa Italia sub-brand between 2009 and 2011.
However, that hasn’t stopped the airline group from nosing around and waiting for the right moment to put its hand in its wallet.
Lufthansa sees possibilities for growth with the hub in Rome ideally situated to further diversify ITA’s network towards Africa and Latin America, offering its customers improved connectivity to the Southern Hemisphere.
There will be risks – those who have watched the Italian aviation market for the past decade (and beyond) will note that industrial relations have not been the strongest in the region, with airline backers walking away and writing off investments with things turn sour quickly.
Lufthansa Group’s intentions seem to be to integrate the airline and take it over eventually – a premade airline, with its own order book that can be used to expand the group’s reach – and at a later date, take full ownership of it.
A tidy growth option – if it works out.
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