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Deal done: Lufthansa buys Italy’s ITA, presumably leaving SkyTeam to join Star Alliance

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There is finally closure on the drawn out sale process of Italy’s ITA Airways.

ITA is the ‘reborn’ Alitalia, although the airline is not currently operating on the scale of its predecessor. Having been through numerous bailouts, at huge cost to Italian taxpayers, it seems that the Government is now close to seeing the back of its problem child.

Lufthansa is acquiring a 41% stake in ITA for €325 million with an option to buy the remaining shares in the future.

Lufthansa buys Italy's ITA, presumably leaving SkyTeam to join Star

It’s a complex structure. The 41% acquisition is via a capital injection, meaning that the money goes to the airline and not to the Italian Government.

The Italian Government has agreed to inject €250 million of its own money in the airline alongside Lufthansa, giving it almost €600 million of fresh funding.

Whilst it will not have a controlling shareholding, Lufthansa has the right to appoint the CEO of the airline and one other board member. The Italian Government will appoint the remaining three board members.

From 2025, Lufthansa has a ‘call’ option over a further 49%. This gives Lufthansa a binding right, but not an obligation, to buy a majority stake. The price will depend on the ‘financial performance relative to the jointly agreed business plan’.

Lufthansa’s CEO has said that there are further options in place covering the remaining 10%.

ITA reported a loss of almost €500 million last year so Lufthansa has a lot on its plate. The acquisition reportedly includes clauses requiring Lufthansa to retain long haul routes so it cannot be turned into a pure feeder airline for Lufthansa itself. That said, Lufthansa’s investor presentation (PDF) yesterday talks up the value of increased feed

There is an implication that the airline will shift its focus to Rome and away from Milan Linate where there is greater competition. Malpensa does not appear to focus in the plans.

Lufthansa buys Italy's ITA, presumably leaving SkyTeam to join Star

ITA is far smaller than Alitalia was pre-covid. 2019 passenger volume for Alitalia was 22 million vs 10 million for ITA last year. A workforce of 10,000 has dropped to 3,900. A fleet of 100+ aircraft has dropped by a third.

The investor presentation shows a growth in the ITA fleet from 66 aircraft to 94 by 2027. Separately published forecasts show revenue growing from €2.5 billion to €4.1 billion. This needs to be achieved in the face of continued competition from Ryanair which is now the largest airline in Italy.

It isn’t clear how Lufthansa’s existing Italian business, Air Dolomiti, fits into the deal. The ITA Airways brand will remain, with the eventual plan being for it to sit alongside Austrian, SWISS and Brussels as a satellite member of the Lufthansa family.

It is virtually certain that the airline with leave SkyTeam and join Star Alliance. The airline would join Lufthansa’s Miles & More loyalty scheme.

Anyone who got ITA elite status via a match from their British Airways Executive Club card in 2022 could soon find themselves with Star Alliance status. The issue is whether the process happens before those status matches begin to expire.

The deal cannot close until it is approved by the European Commission – not expected before the end of 2023 – and it is even possible that the airline may remain in SkyTeam until Lufthansa takes full control in no less than two years.

Lufthansa’s CEO said on Thursday:

“As part of the Lufthansa Group family, ITA can develop into a sustainable and profitable airline, connecting Italy with Europe and the world.”

Good luck with that ….

Comments (17)

  • Nick says:

    Yup, like many others, via the HfP article back in 2022, I status matched from BA EC to ITA Volare, and got their Premium elite staus. Unfortunately it expires in January 2024, so I’d be unlikely to get Star Alliance status, unless there is, maybe, some form of extension offered.

    • Joe says:

      I’m sure their apparent high number of FF is worth something to LH, so here’s hoping for extensions as locking in this ‘on paper’ high value customer to *A must be part of the plan.

  • X2000traveller says:

    Notwithstanding Alitalia’s long and colorful history with state aid of various kinds, surely the hard work has been done by the Italian government who have restructured it down, including many of the high cost employment contracts and aircraft leases? So LH might well be able to turn it into a medium profitable medium distance carrier with some US and S. American routes. There were always too many longhaul routes relative to the size of the Italian market but this has now been addressed. Milan is by far the Iargest market, albeit lots of competition from FR Easyjet and … er…Eurowings on some routes. But there are plenty of gaps in their coverage….

  • Bagoly says:

    Have they repainted in the snazzy blue a rather higher proportion of their ‘planes than Lufthansa has fitted with its new Business Class?
    Or does their PR department have a way of influencing Google Image Searches?
    i.e. is the use of the photo with what was presumably the livery immediately after launch a little unfair?

    • Save East Coast Rewards says:

      The white ones with the ITA Airways logo on them are the ones that carry an eco message on them (unlike BA’s blue Better World plane ITA have a few in that livery). The other ones that are not in the blue livery still say Alitalia with a small ‘operated by ITA Airways’ on the door!

  • Matthias says:

    I fly ITA quite regularly to LIN from both LHR and LCY and can’t fault the service or the punctuality (the clunky digital presence is another matter). You even get juice, typically from a suave older gentleman straight out of movie casting.

    Funnily enough the LCY flights are subcontracted to German Airlines (I assume an independent company) so not sure what will happen to those. Shame if they went as they are very convenient.

    From a financial perspective it was about time for ITA to go as an independent company. If I were an Italian taxpayer I’d be delighted. If I were an LH shareholder, less so, but I assume they think they’ve figured out a plan.

    • ON says:

      I have flown today LCY (08:25)-LIN….58 min delay at takeoff and 45 min delay at touchdown. Luggage issues at LCY..this meant no ITA lounge at LIN because of redoing security after passport control.Today’s flight was although operated by German Airways.

      • ON says:

        And I forgot to mention that my original flight LHR-LIN has been cancelled and reeboked from LCY.

      • CamFlyer says:

        I was on this exact flight a few weeks back, in Y. Flight was comfortable, arrival early, both LCY and LIN very efficient —exactly what I want on a short haul flight. Surprisingly, it was my first time on ITA/Alitalia, notwithstanding 20 years of business travel throughout Europe.

  • Duck Ling says:

    I just don’t get how Lufthansa can be allowed to take over yet another carrier.

    I understand IAG has done the same thing in terms of merging multiple airlines but not in the way how Lufthansa Group now basically blanket covers Central Europe – Germany, Belgium, Austria, Switzerland – and now moving south to take Italy as well.

    IAG on the other hand is much more geographically dispersed with multiple competing hubs between London, Dublin and Madrid.

    I guess this will put additional pressure on KL/AF to nab TAP and I guess it will only be time until the likes of LOT, SAS, Finnair etc find themselves being part of one of these mega groups.

    • nick695 says:

      You’re forgetting the primary country Lufty is based in which can pull the strings of the EU. That’s why it “can be allowed”

    • Marcw says:

      If no one bids for those airlines?

  • zapato1060 says:

    Who remembers Alitalia’s free flights and £48 flights to NYC with the yen coupon.

    • Duck Ling says:

      I don’t remember those ones. But I do remember buying a **cough cough** ‘flash sale’ business class fare on Alitalia from BCN to LAX via FCO for £368 return.

      On the outbound we boarded the LAX flight at FCO, developed a tech issue, was delayed a few hours and reclaimed a good £250 in EU261. So return was literally about £100 in biz at the end lol.

      I flew Alitalia twice in Business Class – once the above mentioned trip and another time from to DEL via Rome from LHR – and I have to say I found the onboard experience excellent. The crew were actually hard working and I would say they had the best catering of any european carrier (provided you aren’t veg/gluten intolerant etc etc). Also, the seating was streets ahead of what BA/KL/AF were offering at the time.

  • IslandDweller says:

    The LCY flights are currently subcontracted because ITA don’t yet have any planes approved for LCY. But very shortly they’re getting some Airbus A220 (was bombardier C series), so from the autumn ITA will themselves operate the LCY route.

  • Bob says:

    Finnair and or LOT to IAG.

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