Lufthansa’s partial takeover of ITA Airways has hit turbulence, amid a high-level spat over the value of the Italian flag carrier.
The German group is set to acquire a 41% stake in ITA, as per an agreement reached in May 2023. Following that, ITA Airways reported positive gross earnings of €62 million in H1 2024, recovering from €68 million in losses for the same period the previous year.
But ITA’s Q4 2024 valuation figures are lower than anticipated and as a result, the purchaser asked for a €10 million discount on the second €325 million installment of the original price tag of €829 million. This prompted the sale to be put on hold by Italian authorities last week, according to Italian news outlet Corriere della Sera.
No “underselling”
As part of the deal, Italy was supposed to pony up an extra €250 million worth of investment in its carrier. A source in Italy’s Finance Ministry, unnamed by Reuters but said to be familiar with the matter, was quoted as saying the Treasury would not “undersell” the asset. Another source said the final price would be influenced by a valuation of an eventual second stake that will be up for grabs in the future.
Taking ITA out of the Skyteam Alliance and into the Lufthansa Miles and More and Star Alliance programme, the deal is due to hand Lufthansa a stronger presence in southern Europe and Italy. But it now hangs in the balance.
Deal approved by EU under threat
The European Commission provisionally approved the merger back in July, based on various undertakings by Lufthansa, in order to ensure competition is not stifled. These included making changes its routes via Rome or Milan and certain Central European airports, and ceding slots to rivals at Milan Linate Airport (LIN). Final submission of the relevant remedial proposals was supposed to take place by 4 November 2024.
In potentially deal-threatening words, the Italian sources said last week that officials there believe they are not obliged to continue with the sale if it is no longer deemed to be in the Italian national interest.
