Lufthansa gets green light to buy Italy's ITA Airways

ITA AIRWAYS AIRBUS A320-216 EI-DSY (MSN 3666)

The proposed purchase of Italy's ITA Airways by Germany's Lufthansa airline has been cleared for takeoff by the European Union. The 325-million-euro ($350 million) deal got the green light from the EU's European Commission on Wednesday.

Under the deal, Lufthansa, which is Germany's national carrier, will acquire joint control of ITA Airways, despite concerns from EU regulators about whether that might impact the availability of short-haul flights from Italy to Central Europe.

To ease regulators' concerns, Lufthansa and the Italian government have agreed to facilitate the operation of more short-haul flights to Central Europe by rival airlines, and Lufthansa has agreed to share landing slots at Milan airport, where it had become dominant.

The approval is conditional upon full compliance with the remedies offered by Lufthansa and Italy's Economy and Finance Ministry, or MEF, said the European Commission in a statement. The commission also said ITA Airways, which was created in 2020 out of the failed national carrier Alitalia, would have faced an uncertain future without such a takeover. Whilst ITA is performing well today, ITA's long-term sustainability as a stand-alone carrier would have remained highly uncertain absent the transaction," the commission said.

The German news agency Deutsche Welle, quoted Margrethe Vestager, the European Commission's executive vice-president in charge of competition policy, as saying Lufthansa and the Italian government had convinced the EU that the acquisition would not negatively impact Europe's airline industry. Lufthansa said it was in talks with Easyjet and Spanish low-cost carrier Volotea to facilitate them taking over some of its short-haul routes.

"The package of remedies proposed by Lufthansa and the MEF on this cross-border deal fully addresses our competition concerns by ensuring that a sufficient level of competitive pressure remains on all relevant routes," Vestager said.

Carsten Spohr, Lufthansa's CEO, said in a statement: "The approval from Brussels is excellent news for ITA Airways and Lufthansa and especially for all passengers flying to and from Italy." Spohr also said ITA's Fiumicino airport hub would give Lufthansa better access to Africa and South America.

The deal, which will ensure Lufthansa has a stronger presence in southern Europe and potential to grow, will start with Lufthansa buying a 41-percent stake in ITA. If the conditions attached to the purchase around competition are all met, Lufthansa will then be able to buy an additional 49 percent of the company beginning in 2025.The Reuters news agency said the German carrier would then be able to buy the remaining 10 percent at some time in the future.

Reuters said the news that Lufthansa was being allowed to purchase ITA was welcomed by the markets, with shares in rival airline IAG also boosted, because investors predicted that IAG will now be allowed to purchase Air Europa

ITA Airways will leave SkyTeam and join the Star Alliance as part of the process of its acquisition by Lufthansa.

Italia Trasporto Aereo, known as ITA Airways, is the flag carrier of Italy. It is owned by the Government of Italy via the Ministry of Economy and Finance and was founded in 2020 as bankrupt Alitalia's successor. The airline flies to over 70 scheduled domestic, European, and intercontinental destinations. ITA is a member of the SkyTeam airline alliance. Its main hub is Rome Fiumicino Airport near Rome and focus city is Linate Airport near Milan.