A year after Lufthansa Group announced its intention to purchase struggling Italian flag carrier ITA Airways we now have an update. The Competition authority of the European Commission has approved the planned acquisition of ITA Airways subject to conditions.
Initially, Lufthansa Group will acquire 41% of the airline in exchange for €325 million with this portion of the deal expected to close in Q4 2024. As part of the agreement, Lufthansa Group has the right to acquire all of the remaining shares of the airline, eventually giving them 100% ownership. The option to purchase the remaining shares has been agreed to by Lufthansa Group and the Italian Ministry of Economy and Finance (MEF) and can begin as early as 2025.
ITA Airways’ Integration into Lufthansa Group
According to the press release issued by Lufthansa Group, a swift integration of ITA Airways is planned after closing and the airline will become the fifth closely integrated network airline (after Lufthansa, SWISS, Austrian, and Brussels Airlines).
As part of the integration, ITA Airways will be fully integrated into Lufthansa Group including:
- ITA Airways will adopt Miles & More as its loyalty program, replacing its existing loyalty program Volare.
- Route networks will be linked via codesharing to allow customers to book travel across the group’s airlines. According to the release this will create over 1,000 new transfer options and open up more options to South America, North Africa, and the Middle East.
- Mutually accessible lounges; eligible passengers across the Lufthansa Group network will have access to carrier lounges.
- Rome-Fiumicino (FCO) will become the group’s 6th official hub (after Frankfurt, Munich, Zurich, Vienna, and Brussels).
Carsten Spohr, CEO of Lufthansa, had this to say after the announcement:
“Despite the comprehensive and far-reaching concessions, the investment in ITA Airways strengthens the Lufthansa Group’s position in global competition. We will make ITA Airways a strong and successful part of our company and thus secure its future as an international airline and strong brand. ITA Airways will support us in further expanding our position as Number One in Europe.”
Carsten Spohr, Lufthansa CEO
While Spohr’s statement talks about “comprehensive and far-reaching concessions”, the actual concessions are fairly minor considering Lufthansa’s already dominant position in this part of Europe. Italy was Lufthansa’s third largest market after Germany and the United States prior to the acquisition.
The concessions include the transfer of slots at Milan’s closer in Linate Airport to a short haul competitor. In addition, traffic between Italy and other Lufthansa Group markets where ITA and Lufthansa Group airlines currently operate as competitors will be opened up to competitors. Finally, additional flights from Rome to hubs of other European competitors (like my British Airways flight last year) will be added to increase competition on long-haul routes.
As part of the deal ITA is also looking to join Star Alliance. The carrier has been a pseudo-member of SkyTeam in recent years as earning and redemption options have been limited. It will be interesting to see if Lufthansa Group tries to add ITA to its transatlantic joint venture or if it remains on the outside looking in.
I’ve only flown short-haul with ITA but did fly long-haul with its predecessor Alitalia. The short haul flight was fine but I’ve heard good things about ITA’s long haul flights, especially the food, so I’m interested to see what mileage redemptions will look like as the carrier cozies up to Star Alliance and becomes part of Lufthansa Group.
Summary
The European Union has approved Lufthansa Groups Purchase of 41% of ITA Airways. The deal is expected to close in Q4 of 2024 with the airline becoming fully integrated into Lufthansa Group. Beginning in 2025, Lufthansa Group can begin purchasing the outstanding shares of the airline until it is a wholly owned subsidiary.
From a passenger standpoint this marks a significant reduction in competition as Lufthansa was already one of the largest airlines in the Italian market prior to the purchase. The airline group has had to provide some minor concessions as part of this deal but it is less than I would have expected, though the Lufthansa CEO thinks otherwise.
