The Lufthansa Group is serious about the intended takeover of the Italian airline Ita Airways. The MDax group announced on Wednesday that an offer for the Alitalia successor had been submitted to the Ministry of Economics and Finance in Rome. Lufthansa is initially aiming for a minority stake, but wants to secure options for the acquisition of the remaining shares when entering the company.
From Rome it was said that Lufthansa was the only interested party to submit an offer for the loss-making airline with 66 machines. The Ministry of Economics and Finance, as the owner of the Alitalia successor, announced in Rome that the declaration of intent from Germany is now being examined. After that, exclusive negotiations between Lufthansa and the Italian state for a final purchase agreement could be started. Details or a time frame for the duration of the test were not given.
Lufthansa is expecting negotiations on the structure of the participation as well as on the operational integration into the group of companies. A takeover would be subject to approval by the EU Commission under competition law.
Price dropped for Ita?
Lufthansa did not name any sums for their offer. It had been said in various media that it was initially about a 40 percent share, for which between 200 million and 350 million euros could be due. According to industry circles, Lufthansa, together with the major shipping company MSC, had already offered around 850 million for 80 percent of Ita last year. So the price would have fallen.
The Ita was launched in October 2021 as the unofficial and significantly smaller successor to Alitalia, which finally had to give up in the Corona crisis. The company has only flown losses since it started and has had to continue to be supported by the state, which the EU has approved. With around 4,000 employees, it has a market share of around 20 percent in its home country.
Lufthansa has been trying for decades to gain a foothold in the important market beyond the Alps, which also boasts strong US business. In 2009, the newly founded Lufthansa Italia competed against Alitalia, which had just been privatized, but was quickly closed again after heavy losses. At the moment, the group is only attracting transfer passengers from wealthy northern Italy to the Munich hub with its regional subsidiary Air Dolomiti. Not without success: After the USA, Italy is the second most important foreign market for Lufthansa, as CEO Carsten Spohr always emphasizes.
New bidding process
Last year, Lufthansa had sought a majority takeover of Ita in a partnership with the Swiss-Italian shipping company MSC. However, MSC got out after the US fund Certares with the airlines Delta and Air France-KLM in the background was supposed to be awarded the contract. The US corporation Indigo, which has a stake in the low-cost airline Wizz Air in Europe, had also shown interest in the Ita. A sale did not materialize, however, so that a new bidding process was started.
According to reports, a central point in the negotiations is the possible influence of state authorities on business policy. In a decree, the right-wing government under Giorgia Meloni had given a new minority owner a free hand in operational decisions. However, experts had advised Lufthansa to secure a majority in order to be able to push through reforms.
Huge price gains at Lufthansa
Joint purchasing and coordinated flight schedules are considered starting points for bringing the Ita into the profit zone. Lufthansa’s share price was already in good shape before the offer and peaked at EUR 9.285 on Wednesday, its highest level since August 2021. A strong annual financial statement by the US airline United Airlines, which significantly exceeded profit expectations and Recovery in travel benefited. Since the beginning of the year, the price gain at Lufthansa has now amounted to around 19 percent.
Deutsche Lufthansa AG has taken over several European airlines in recent years. Former state companies such as Swiss, Austrian Airlines and Brussels Airlines, the Belgian successor to Sabena, can now be found in Europe’s largest aviation group. Lufthansa took over the latter in two stages and initially also started with a minority. Another possible takeover target is the Portuguese Tap.
