Lufthansa-ITA deal given EU green light

The European Commission has approved Lufthansa Group’s proposed acquisition of Italian flag carrier ITA Airways following an ‘in-depth investigation’ by the EU Antitrust.

The deal, first announced in May 2023, will see the European aviation giant gain an initial 41 per cent stake in ITA Airways for €325 million, with options to acquire the remaining shares from 2025.

The long-awaited green light from European competition regulators comes after Lufthansa and the Italian government made several concessions following concerns the deal could increase flight prices or “decrease quality” of airline services to and from Italy.

European Commission executive vice president Margrethe Vestager, said: “The package of remedies proposed by Lufthansa and the MEF [the Italian Ministry of Economy and Finance] on this cross-border deal fully addresses our competition concerns by ensuring that a sufficient level of competitive pressure remains on all relevant routes.”

To clinch the deal, Lufthansa and ITA agreed to transfer slots at Milan-Linate Airport to a short-haul competitor as well as enable one or two rival airlines to start non-stop flights between Rome or Milan and certain hubs in Central Europe.

Lufthansa CEO Carsten Spohr said the EU’s decision provides “a clear signal for strong air traffic in Europe, which can successfully assert itself in global competition.”

In a statement, the airline group said it is now planning a ‘swift integration’ of ITA Airways and its 5,000 employees, joining the likes of Austrian Airlines, Swiss, Brussels Airlines and Eurowings in the Lufthansa Group.

Rome-Fiumicino will become the group’s sixth hub and, after the closing, route networks will be linked through code sharing. The Italian airline will also become part of the group’s Miles & More loyalty programme and will be able to leverage the group’s capacity for aircraft and fuel purchasing, according to Lufthansa.

Lufthansa Group said the acquisition will also “strengthen competition in Italy, which is currently characterised by a superior position of low-cost airlines”.

The transaction is now expected to close in the fourth quarter of 2024 following the approval of competition authorities outside the EU. 

Meanwhile, the EU Commission is also investigating British Airways-owner IAG’s bid to buy Air Europa as well as Air France-KLM’s offer to take a 19.9 per cent stake in Scandinavia’s SAS.