Lufthansa Group has confirmed reaching an agreement with the Italian Ministry of Economy and Finance (MEF) to acquire a minority stake in the Italian national carrier ITA Airways. Lufthansa will obtain a 41% stake for €325 million through a capital increase, making ITA the fifth network carrier in the group.
As part of the agreement, the MEF has also committed to a capital increase of €250 million into ITA. In addition, the MEF and Lufthansa agreed on options to enable a potential acquisition of the remaining shares by Lufthansa at a later date, the purchase price for the remaining shares being based on the business development of the airline.
The contractual finalization of the agreement is expected to be completed shortly. The acquisition of the minority stake is subject to approval by the relevant authorities. Upon closing of this transaction, ITA Airways and Lufthansa Group are expected to immediately start their cooperation at a commercial and operational level, Lufthansa confirmed in a statement.
This agreement is good news for Italian consumers and for Europe, because a stronger ITA will invigorate competition in the Italian market.Carsten Spohr, Lufthansa Group CEO
ITA Airways will become the fifth network carrier in Lufthansa’s multi-brand and multi-hub system. Italy represents the most important market outside the group’s home base countries and the United States. Being the third-largest economy in the EU in terms of gross domestic product, with a strong export-oriented economy is one among many reasons why business travel to and from Italy is important. For private travellers, the Mediterranean country is one of the most popular leisure destinations in the world.
Moreover, as Alitalia’s successor, ITA has significant rights to take-off and landing slots at Rome Fiumicino and Milan airports. Specifically, it inherited 43% of its predecessor’s slots at the Roman and Milanese facilities, another reason for which Lufthansa and Swiss-Italian shipping group MSC had expressed interest in acquiring a majority stake in the airline after the privatization was announced last year.
As part of Lufthansa Group, ITA will remain a standalone airline with its own management and a strong brand. At the same time, the airlines can benefit from synergies of the Group, such as access to the partner network, central revenue management and the use of the group’s global sales and marketing channels.
Founded in November 2020, ITA Airways welcomes more than 10 million passengers per year and is running a modern fleet of 66 Airbus aircraft. Its headquarters hub in Rome is ideally situated to further diversify the airline’s network towards Africa and Latin America, offering its customers an improved connectivity to the Southern hemisphere. Currently, ITA serves 64 destinations: 21 domestic, 33 international and 10 intercontinental routes.
“As a young company with a modern fleet, and with its efficient and expanding hub in Rome, ITA is a perfect fit for Lufthansa Group”, Lufthansa Group CEO Carsten Spohr commented on the acquisition. “In Milan, ITA serves a strong catchment area which also offers potential for growth. As part of the Lufthansa Group family, ITA can develop into a sustainable and profitable airline, connecting Italy with Europe and the world. At the same time, this investment will enable us to continue our growth in one of our most important markets.”
To ensure that ITA’s growth is sustainable, Lufthansa intends to extend the intermodal transport for feeder traffic within Italy. For this purpose, the group has signed a Memorandum of Understanding with the Italian state railroad company Ferrovie dello Stato Italiane last February, the aim of the partnership being to increasingly transport passengers in Italy with rail connections to and from their respective flight connections at various Italian airports, similarly to other Lufthansa Group intermodal cooperation programs in its home markets, including Deutsche Bahn, Austrian ÖBB and Swiss Federal Railways.