The Italian Ministry of Economy and Finance (MEF) and Deutsche Lufthansa AG have officially agreed on the acquisition of a 41% stake in ITA Airways through a capital increase of EUR 325 million, with the option to acquire all remaining shares at a later date.
This capital injection benefits the company directly: as part of the agreement, the MEF has also committed to a capital increase of EUR 250 million in ITA. Additionally, MEF and Lufthansa have agreed on options that allow for the possible future acquisition of the remaining shares by Lufthansa, with the purchase price based on ITA Airways’ business development.
Contractual completion of the agreement is expected to be completed soon, subject to the approval of the relevant authorities, including the European Commission.
Lufthansa Group has been attempting to buy ITA Airways since the old Alitalia, when its other competitor was Certares, which included Air France-KLM Group in the bid.
ITA Airways is set to become the fifth airline of the Lufthansa Group
Once this transaction is closed, ITA Airways and the Lufthansa Group are expected to immediately begin their commercial and operational cooperation, consolidating ITA Airways as the fifth airline in the German group’s multi-brand and multi-hub system network.
In addition to Lufthansa, the Lufthansa Group comprises Austrian Airlines, Brussels Airlines, Eurowings, and Swiss International Airlines as its main airlines. Each of these airlines has subsidiaries, including Lufthansa CityLine, Air Dolomiti, Lufthansa Cargo, Edelweiss Air, Eurowings Discover, and Eurowings Discover.
For the Lufthansa Group, the addition of ITA Airways represents a significant addition due to its broad receptive market. In 2022, Italy ranked fifth in Europe in terms of tourist income, maintaining this position for more than a decade.
Italy is the third-largest economy in Europe in terms of gross domestic product, with a strong export-oriented economy. For these and other reasons, business travel to and from Italy is of great importance. Moreover, Italy is one of the world’s most popular leisure destinations.
Carsten Spohr, CEO of Deutsche Lufthansa AG, said: «Today’s agreement will result in a win-win situation for Italy, ITA Airways, and the Lufthansa Group. As part of the Lufthansa Group family, ITA can become a sustainable and profitable airline, connecting Italy with Europe and the rest of the world. This investment will allow us to continue growing in one of our most important markets.»
See Also: Alitalia versus low cost in Italy’s complex market
Lufthansa’s plans for ITA Airways
The CEO highlighted the two ITA Airways bases in Rome and Milan, which encompass two distinct markets. Rome/Fiumicino stands out as an O&D hub (origin and destination) for ITA and the former Alitalia, while Milan caters to corporate and leisure clients, with a high-income passenger volume.
ITA Airways was established in November 2020 as the successor to Alitalia, which ceased operations on October 15, 2021 due to its accumulation of large debts. Since then, this new Italian airline has been focusing on profitable destinations while seeking a new investor or total acquisition by an airline.
ITA Airways’ network is composed of 21 domestic destinations, 29 in Europe, 7 in the United States, 3 in Africa, 3 in Asia, and 3 in South America.
The airline’s fleet is comprised of a total of 67 aircraft:
- Four Airbus A220-300.
- Eighteen Airbus A319ceo.
- Twenty-six Airbus A320ceo.
- Five Airbus A320neo.
- Eight Airbus A330-200.
- Six Airbus A350-900.
In addition, ITA Airways has orders for nine A220-100, eleven A220-300, twenty A320neo, nine A321neo (LR), eighteen A330-900, and two A350-900.
Lufthansa seeks to leverage its base in Rome/Fiumicino to establish connections primarily with Africa and Latin America.
Italy is the second most important market for Latin America and the Caribbean, but currently, the connectivity between both regions is limited. On the other hand, Africa is already served by Lufthansa and Brussels Airlines, but ITA Airways’ geographical proximity to the continent allows it to add new destinations.
Furthermore, the Lufthansa Group intends to expand intermodal transport in Italy. It recently signed a Memorandum of Understanding with the state railway company Ferrovie dello Stato Italiane SpA, which will allow connections between Italian airports and the Group’s destination network.
It’s noteworthy that the Lufthansa Group already operates similar intermodal cooperation programs in its home markets, including Deutsche Bahn, Austrian ÖBB, and Swiss Federal Railways.
