Germany’s Lufthansa is buying 41 percent of Italy’s ITA airline

Last year, German airline Lufthansa offered to buy 41 percent of Italian flag carrier ITA Airways. The European Union (EU) approved their proposal on Wednesday. As a result, the process of buying shares may be completed within this year.

German media Deutsche Welle reports that Lufthansa will pay 32.5 million euros for this 41 percent. The German airline is planning to buy another 49 percent of ITA next year.

Alitalia, Italy’s former flag carrier, closed due to heavy losses. Instead of that, ITA Airways started its journey in 2020.

When Lufthansa proposed to buy ITA’s stake last year, the EU wanted to make sure that it would not have the effect of raising ticket prices before approving it. The EU feared that Lufthansa’s purchase of ITA’s shares could reduce competition in air travel between Italy and Central Europe and between Italy and the US-Canada. As a result, passengers may have to buy tickets at higher prices or the quality of passenger services may decrease.

The EU negotiated with Lufthansa and ITA for almost a year before giving approval. Meanwhile, the EU forced Lufthansa-ITA to make some concessions. As they wanted to ensure that one or two rival airlines could operate direct flights between Rome, Milan and Central Europe. The EU has also confirmed that slots at Milan’s Linate airport will be given to rival airlines operating short-haul flights.

Italy’s Economy Minister Giancarlo Giorgetti is happy with the EU’s approval. It has been a complex, problematic and difficult path, he said at a press conference in Rome on Wednesday. But it was a great success for Italy, a success for Germany too. Basically it is a big European success.

More potential deals

Germany’s Lufthansa is one of Europe’s three largest airline groups. The other two are British Airways owner IAG and Air France-KLM.

Since 2019, IAG has been trying to buy the Spanish airline Air Europa. The EU has asked for some concessions in the talks. The EU has given the IAG till August 20 to make a decision in this regard. Air France-KLM has offered to buy 19.9 percent of Scandinavian SAS. Discussions are going on with the EU about that too.

Source: Deutsche Welle