The Italian Ministry of Economy and Finance announced today that it has agreed on a deal with the Lufthansa Group for its purchase of 49% equity in the newly founded airline, ITA Airways, for a price of €325 million. Such acquisition is seemingly the third step of the restructuring process of ITA Airways, since the new airline has been financially struggling from the very beginning.
The agreement was concluded even though Lufthansa had, earlier in 2023, bought a 41% stake in ITA Airways for €325 million. The German airline group will have the chance to increase the share to 100 percent in the future following regulatory approval. Though an initial agreement was reached in May 2023, the European Commission approved the 41% share only in July 2024.
The talks over the 49% stake holding have been dragged; both parties had their issues with regards to the terms and pricing that they wanted to agree on. Lufthansa had also asked for a €10 million discount on the buy price as it had already paid, as according to value, ITA Airways has depreciated during recent months. The Italian government did not give this concession, so the deal has been further delayed.
Subject to EU regulatory approval, the sale follows months of scrutiny over whether the deal may raise competition concerns, as Lufthansa has already had such a strong presence in the European airline market. Yet Lufthansa has promised regulators that it would ensure fair competition, especially on long-haul routes, and there will be no significant price hikes.
ITA Airways has suffered from various problems to reach profitability, and the group hopes that by selling this airline, at least part of the financial pressure it puts on the Italian government will be reduced. Lufthansa has developed a strong enough portfolio, making some struggling carrier subsidiaries such as Eurowings, Swiss International Airlines, and Brussels Airlines into success stories, hence becoming one of the best partners for the future of ITA Airways.
By 2025, Lufthansa is expected to launch a tender for a stake in TAP Air Portugal as part of its far bigger attempt to expand its operations in European air transport.
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