The European Union’s antitrust regulator is set to approve Lufthansa’s proposed takeover of the loss-making Italian flag carrier ITA Airways after the German airline group reportedly submitted a new dossier of concessions to address competition concerns brought up by the commission.
Lufthansa has been attempting to acquire a stake in ITA Airways for over two years after Prime Minister Giorgia Meloni put the state-controlled successor to Alitalia up for sale in February 2022 as part of a wider project to shore up the country’s finances.
Following lengthy negotiations, Lufthansa finally sealed the deal to acquire an initial 41% stake in ITA Airways last May. The airline group would then look to increase that stake at some point in the future.
Since May 2023, however, the deal has been stuck in the quagmire of an antitrust probe by European regulators who have become increasingly concerned about the extent of airline consolidation across the continent.
The Lufthansa Group already has a significant presence in Germany, Austria, Belgium and Switzerland, and an initial set of remedies proposed by the airline to quell the EU’s fears were quickly dismissed by regulators.
In particular, the EU highlighted three areas that the proposed merger threatened competition: reducing competition on short-haul routes between Italy and Central Europe, reducing competition on long-haul routes between Italy and the United States, Canada and Japan, and solidifying ITA’s dominant position at Milan-Linate Airport.
Sources say Lufthansa has now submitted its final proposed package of measures designed to address these concerns. Regulators have until July 4 to formally approve the package, although it now looks like a decision is tipping in Lufthansa’s favour.
Lufthansa has indicated that it won’t offer any further concessions to get the deal approved and could potentially walk away from ITA Airways if regulators are still unhappy with the airline group’s proposals.
Matt’s take
This has certainly been a long and drawn-out airline merger, so it’s little surprise that Lufthansa is fast running out of patience and is willing to walk away if it can’t get the deal over the line very soon.
It’s certainly a case that ITA Airways needs Lufthansa more than Lufthansa needs the Italian carrier, and even if Lufthansa does convince European regulators to approve the takeover, it will have its work cut out to bring down costs at the loss-making airline.
In addition to the Lufthansa and ITA Airways deal, the European Commission is also probing the proposed takeover of Air Europa by the IAG Group.
The Italian flag you are referring to is not loss making, I think you are confusing ITA with Alitalia. It already closed 2024 with positive EBITDATA and it is already 36% ahead vs the same period of last year. In 2024 recuperated 553M euro vs budget closing with operation break even and gain before taxes, introducing 36 new gen aircrafts including long hall airplanes.
If you define your self passioned about aviation industry you should not talk using stereotypes.
Oh come on, EDITDA… Really? ITA Airways has certainly improved its financial position a lot but it still reported a net loss in 2023. Therefore, it’s loss-making.