European airline behemoth Lufthansa has managed to strike a deal with the Italian government for an initial 41% stake in Rome-based ITA Airways. The deal will set the Lufthansa Group €325 million through a capital increase and includes a clause that allows Lufthansa to purchase the remaining shares in the future.
A formal announcement today had been widely expected after sources familiar with the state of negotiations started to brief the Italian media yesterday. Italy’s Economy Minister had also let it be known that Lufthansa CEO Carsten Spohr was flying to Rome on Thursday to finalise the deal.
Lufthansa said ITA Airways would become a network airline of the Lufthansa Group, alongside Austrian Airlines, Brussels Airlines and SWISS. Spohr claims Italy has been identified as the most important market for the Lufthansa Group outside of its existing home markets and the United States.
“Today’s agreement will lead to a win-win situation for Italy, ITA Airways and Lufthansa Group,” commented Spohr shortly after the deal was officially announced. “As a young company with a modern fleet, and with its efficient and expanding hub in Rome, ITA is a perfect fit for Lufthansa Group”.
Despite facing fierce competition from low-cost rivals which dominate short-haul Intra European air travel in Italy, Lufthansa believes there is still plenty of market share available for a standalone full-service airline such as ITA Airways.
Lufthansa pointed at Italy’s strong export-oriented economy and the country’s popularity with premium international leisure travellers as reasons to be cheerful about ITA’s chances of success in a crowded market.
To try to grab market share from rivals, Lufthansa has already penned a deal with the Italian state railroad company Ferrovie dello Stato Italiane for intermodal transport for feeder traffic within Italy.
“As part of the Lufthansa Group family, ITA can develop into a sustainable and profitable airline, connecting Italy with Europe and the world,” Spohr continued. “At the same time, this investment will enable us to continue our growth in one of our most important markets.”
ITA Airways will remain a standalone airline with its own management team, but it will “benefit from group synergies” to help lower its existing high overheads. The airline currently employs around 4,000 workers and cooperates with an all-Airbus fleet of 66 aircraft.
The final deal is subject to regulatory approval from the European competition watchdog.
