The Italian government agreed to sell a stake in ITA Airways to Lufthansa, allowing the German airline to expand in a major market while charting a course for Rome to rid itself of an asset that’s soaked up billions of euros in state support.
Lufthansa, Europe’s biggest airline group, will initially buy a minority stake, the airline and Italy’s government said in a joint statement, without disclosing financial details of the transaction. The German airline group has said its goal is to take full control of the Italian airline over time.
“A stronger ITA will invigorate competition in the Italian market,” Lufthansa chief executive Carsten Spohr said in the statement. Lufthansa plans to expand the fleet to 94 aircraft by 2027 from 71 now and increase the number of employees to 5,500 by then.
ITA and its predecessor, Alitalia, have been a drag on state coffers for decades. Alitalia, which began flying two years after the end of the second World War, officially ceased operations in 2021 and a scaled-back version, reborn as Italia Trasporto Aereo, or ITA, remained under government ownership.
For Lufthansa, the foray is a gamble on an Italian market that’s more competitive than the German carrier is accustomed to following the rapid expansion of low-cost operators. Chief financial officer Remco Steenbergen cautioned this month that it would take some time to make ITA profitable.
The deal is expected to receive intensive antitrust review from European Commission officials in Brussels.
Adding ITA to Lufthansa’s stable of German, Swiss, Austrian and Belgian flag carriers will allow the German carrier to establish a southern hub in Rome, tapping the lucrative transatlantic market. It will also be able to optimise flight schedules on European routes, boosting yields. – Bloomberg
