Lufthansa Prioritizes Commercial Partnership with Alitalia over Shareholding

 - November 19, 2019, 12:13 PM

There are just two days to go before a consortium led by Italy’s state-owned railway company Ferrovie dello Stato (FS) is expected to submit a binding business plan mapping out the rescue of Alitalia and its participants.  Lufthansa CEO Carsten Spohr contends the German group is ready to assist Alitalia with its turnaround, however, Lufthansa will not invest in the struggling Italian carrier before it is fully restructured. “We have not changed our position. In the current Alitalia, we will not invest. But we would be interested in being the commercial partner to turn the company into a successful airline. Once it is a successful airline, we also see ourselves investing,” Spohr said, speaking at the IATA Wings of Change Europe conference in Berlin on Tuesday.

“It will be very challenging for Alitalia to be successful on their own. You need partners, nowadays, to be successful,” Spohr asserted. “Swiss needed a partner, Austrian Airlines needed a partner, Brussels Airlines needed a partner, even Lufthansa needs a partner,” he noted, referring to the different network airlines belonging to the Lufthansa group. “What we are telling the Italians is that, much more important than who is investing the last 10 percent [in the rescue consortium], is the question; are you on your own in Europe, or do you have a strong partner, a partner with a strong frequent flier program, with support and a sales team in China, Canada, Latin America? We have all that. We can offer that. Others are willing to offer a 10 percent investment. It is up to the Italians to decide what is the most important,” said Spohr.

The economic development ministry has set November 21 as a deadline, the seventh, for FS to submit a long-term business plan and new shareholding structure for Alitalia Newco. Alitalia and its regional subsidiary Alitalia CityLiner were declared insolvent in May 2017, and the airlines were placed under extraordinary administration.

Last month, Italian infrastructure group Atlantia and FS said they remained committed to rescuing Alitalia, though they attached a string of conditions to their potential participation including the involvement of an airline in the ownership and management of the new flag carrier. Delta Air Lines would be willing to invest 10 percent in the new Alitalia, aiming to keep the airline in the SkyTeam alliance and maintain a stronghold in the U.S.-Italian market. Bringing Lufthansa into the consortium would raise questions about Alitalia’s membership in SkyTeam, as Lufthansa is part of Star Alliance.

Meanwhile, Air France KLM CEO Ben Smith reiterated the Paris-based group is not interested in participating in the relaunch of Alitalia, pointing out that the Franco-Dutch company had twice made an investment in Italy’s perpetually loss-generating national airline. Italy is a large market, he told IATA Wings of Change Europe delegates, but Alitalia is a “challenging” airline. The best way forward for Air France and KLM to continue working with Alitalia is through SkyTeam, he said.