Lufthansa Offers To Buy Stake in Italy’s ITA Airways

 - January 18, 2023, 12:38 PM
An ITA Airbus A320 departs Brussels International Airport. (Photo: Flickr: Creative Commons (BY-ND) by LV Aircraft Photography)

Lufthansa has submitted an offer to the Italian Ministry of Economy and Finance to buy a stake in the capital of the country’s flag carrier airline, ITA Airways. “The plan is to agree on the initial acquisition of a minority stake as well as on options to purchase the remaining shares at a later date,” Lufthansa confirmed in a statement on Wednesday. It did not disclose financial details, but according to Italian media, the German group would initially acquire a 40 percent shareholding through a reserved capital increase worth between €300 million and €350 million.

If successful, Lufthansa’s bid would mark the end of the challenging privatization process of ITA Airways, which it initiated just months after it started operations in mid-October 2021 as the successor airline of bankrupt Alitalia. The Italian state owns 100 percent of the capital of ITA Airways.

The first call for tenders—launched at the beginning of last year by the previous Italian government of Mario Draghi—provided for the sale of a majority stake in ITA Airways, with the Italian state retaining the remainder. The change of government in September 2022, to a coalition led by Giorgia Meloni, also changed the conditions of the call for tenders, requiring the Italian state to retain the majority of ITA's capital. A lack of interest prompted yet another revision of the terms of the privatization in December.

The political wrangling, combined with ITA’s poor financial state, has led to the coming and going of several potential suitors. They include a consortium formed by ITA Airways’ SkyTeam partner members Air France-KLM, Delta Air Lines, and the U.S. investment fund Certares; shipping giant MSC, which originally teamed up with Lufthansa; and Indigo Partners in cooperation with Hungarian low-cost carrier Wizz Air.

Lufthansa maintains a longstanding interest in taking a stake in Italy’s flag carrier, first Alitalia and now ITA Airways, owing to the importance of the country's market. “For Lufthansa Group, Italy is the most important market outside of its home markets and the U.S.,” it noted in today’s statement.

Once its offer is retained, Lufthansa will enter into exclusive negotiations with the Italian Ministry of Economy and Finance. “These talks would primarily focus on the form of a possible equity investment, the commercial and operational integration of ITA into the Lufthansa Airline Group, as well as resulting synergies,” the German group said.

If the parties reach a binding agreement, its implementation would stand subject to approval by the relevant authorities including the EU’s.