The Italian Ministry of Economy and Finance has revealed that it has reached a deal with Germany’s Lufthansa Group for a 49% stake in ITA Airways.
The Italian government has announced that it has reached a deal with Lufthansa Group, regarding the latter wanting to acquire a 49% stake in ITA Airways, Italy’s flagship carrier. The sale is expected to be worth €325m.
Lufthansa’s share price dropped 1.04% on Tuesday morning.
On Monday evening, the Italian Ministry of Economy and Finance, said that the European Commission had now received all the required documents on time. This was just a few hours before a midnight deadline.
This follows Lufthansa already having bought a 41% stake in ITA Airways, also for €325m, with an option to increase it to 100% down the line. Although Lufthansa reached a deal with the Italian Ministry of Economy and Finance for this purchase in May 2023, it only obtained the European Commission’s approval for the same earlier this year, in July.
The subsequent deal with the Italian government for the 49% stake comes after months of negotiations and delays, as both parties struggled to reach an agreement regarding price and terms.
This was mainly because of Lufthansa wanting a €10m discount on the price of the 49% stake, which the Italian government did not agree to, stalling negotiations. Lufthansa revealed that the main reason for its discount request was ITA Airways’ estimated drop in value in the last quarter of this year.
There have also been anti-competition concerns with this deal, given Lufthansa’s significant reach and operations in Europe already. However, Lufthansa has consistently said that it would prioritise fair competition, especially on its long-haul routes and not raise prices too much.
A Lufthansa Group spokesperson said in a statement, received by Euronews over email: “Lufthansa Group confirms the submission of a remedy package to the European Commission to fulfill the conditions of the clearance decision regarding the acquisition of 41% in ITA Airways obtained on 3 July 2024.
“The submission was done jointly with the Italian Ministry of Economy and Finance (MEF) in due time on 11 November 2024. Lufthansa Group is confident that the EU Commission will approve the remedy package within the upcoming weeks.”
Could ITA Airways’ sale boost the Italian government’s finances?
The Italian government has been trying to sell ITA Airways for a while now, mainly because of the airline’s long-term underperformance. As such, a sale would also mean a boost for Italy’s finances.
Lufthansa also has significant experience turning struggling airlines around, with a vast network of subsidiaries such as Brussels Airlines, Eurowings, Discover Airlines, Swiss International Airlines (SWISS) and more.
With Italy also seeing a rise in air travel, being especially popular with budget carriers such as Ryanair, EasyJet and more, this deal is also expected to direct more air traffic to the country.
Lufthansa is also expected to make an offer for a stake in TAP Air Portugal next year.
