Italy continues the privatization process of ITA Airways

The Italian government is moving ahead with the privatization process of ITA Airways, the state-owned flag carrier created in 2021 as the successor to Alitalia. Confirming the timetable announced by Alfredo Altavilla, the company’s President, an initial agreement is expected to be reached in June and the process to be closed in December.

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In a recent meeting, ITA approved last year’s balance sheet and froze the injection of 400 million euros of capital until June. The government’s objective, given the clear interest of companies in acquiring a majority stake in the company, is not to have to pay for it.

Two of the three interested in acquiring the company have entered its data room: the consortium formed by the cruise company MSC and Lufthansa, and the US investment fund Certares, which is proposing a partnership between ITA Airways, Air France-KLM and Delta Air Lines. The other interested player is Indigo Partners, a private capital firm with stakes in Frontier Airlines, JetSmart, Volaris and Wizz Air, among other low-cost carriers.

The capital injection had been approved by the European Commission. In 2021, the airline received 720 million and disbursement of 250 million is planned for 2023. However, the 400 million euros planned for 2022 was postponed until June.

The Ministry of Economy believes that this payment could be waived. In the event that the government reaches an agreement with the winning consortium in June, the new manager could deal with the injection of liquidity, which could be included in a pre-agreement and as an advance payment for the final operation. According to Italian media, this is already foreseen in the MSC and Lufthansa project. In this way, the state would avoid paying 650 million euros between 2022 and 2023.

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Sources in the same Ministry reported that MSC and Lufthansa offered a deal worth between 1 and 2.4 billion euros. Certares proposed to take over the company for no more than 700 million euros, although it is enlisting the help of Elliott fund emissaries to strengthen its proposal, according to industry sources. Indigo Partners has not yet signed confidentiality agreements and therefore did not have access to the data at the moment.

According to the Corriere della Sera, the airline should receive a first binding offer within the next few days. It is likely to come from MSC and Lufthansa, who were the first interested in acquiring the company. Both have been in talks with the Italian government since January.

The cruise company could become a shareholder, while the German airline could provide logistical, commercial and strategic support.

See also: MSC and Lufthansa are still interested in ITA Airways