Lufthansa gets green light from EU Commission to take stake in ITA

The EU Commission has approved Lufthansa‘s investment in the state-owned Italian airline ITA Airways (ITA). Although the airline is currently performing well, its long-term existence as an independent entity is “highly uncertain” without this transaction. The EU Commission also stated that approval is contingent upon the airlines fulfilling conditions to safeguard competition.

After years of endeavour, Lufthansa has finally achieved its goal of expanding in Italy, its second most important market after the U.S.A. ITA, which emerged from the chronically loss-making state-owned airline Alitalia four years ago, has been reorganised and downsized. It will become the seventh airline subsidiary outside Germany to benefit from Lufthansa’s extensive network. At the end of May 2023, Lufthansa agreed with the Italian government to purchase an initial 41% stake in ITA for €325 million. Options for a full take-over at a later date were also agreed upon.

Carsten Spohr, CEO of Deutsche Lufthansa AG, commented: “The approval from Brussels is excellent news for ITA Airways, Lufthansa and especially for all passengers to and from Italy. We are delighted to soon be able to welcome ITA Airways and its great employees as a new member of our airline family. The decision is also a clear signal for strong air traffic in Europe, which is successfully asserting itself in global competition.”

The EU competition authority’s decision was preceded by a long negotiation between the Commission’s experts, the Italian government and Lufthansa. EU Competition Commissioner Margrethe Vestager had significant concerns that the merger could disadvantage consumers by reducing options and increasing ticket prices. To prevent this, conditions have been imposed on Lufthansa and ITA, including the surrender of take-off and landing rights at Milan Airport for direct flights within Europe. Lufthansa and ITA are required to ensure sufficient competition on both short- and long-haul routes through agreements with competing airlines.