The Italian government has reportedly put the partial sale of national carrier ITA Airways on hold after Germany’s Lufthansa Group demanded a €10 million discount on the purchase price.
Lufthansa had been set to acquire a minority 41% stake in ITA Airways, with the Italian government retaining the rest of the shares in the government-controlled carrier in a €325 million deal which was approved by EU competition regulators in July.
The decision to put the deal on hold came at the eleventh hour, with the two sides set to exchange paperwork on the evening of November 4, before Rome got into a dispute with Lufthansa over the agreed purchase price.
According to sources cited by Italian newspaper, Corriere Della Sera, the Lufthansa Group wants to invoke a clause in the paperwork which adjusts the purchase price based on the airline’s current value.
In order to calculate the carrier’s current value, Lufthansa is seeking to use ITA’s projected financial results for the fourth quarter of the financial year, which covers the quieter winter months when airlines traditionally make the least amount of money.
Using the adjusted figures, Lufthansa believes it could save just €10 million on its originally agreed purchase price, but the relatively small sum has been enough to bring the deal to the precipice.
The Lufthansa Group reached an agreement with the Italian government to purchase a stake in ITA Airways in May 2023 following a lengthy tender process that saw the airline battle the likes of Delta and Air France.
The deal was, however, subject to a probe by European competition regulators, who eventually cleared the acquisition in July on the proviso that Lufthansa make a small number of concessions by relinquishing a small number of slots to other airlines.
Explaining its decision, the European Commission said that it was limiting the remedies imposed on the deal because without Lufthansa’s involvement in ITA Airways, the carrier’s very existence remained uncertain.
ITA Airways was born out of the ashes of Alitalia, which ceased to exist in October 2021 when the Italian government struck a deal with the EU to wipe the slate clean of Alitalia’s mounting losses by creating a new state-owned airline known as Italia Trasporto Aereo or ITA Airways.
The deal was largely a paper exercise, with ITA Airways simply taking over Alitalia’s planes and hiring many of its employees, but it was the only way to circumvent the EU’s rules that prohibited the Italian government from pumping even more taxpayer money into the airline.
Lufthansa maintains that it is simply adhering to the agreement that it signed with the Italian government.
