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Lufthansa Group gets green light to acquire minority stake and subsequent acquisition of ITA Airways

Douglas Toh
·4-min read

Lufthansa Group will first acquire a stake of 41% in ITA Airways, and the remaining shares will be acquired for EUR325 million.

Deutsche Lufthansa AG (Lufthansa Group), the Italian Ministry of Economy and Finance (MEF) and Italia Trasporto Aereo S.p.A (ITA Airways) have expressly welcomed the European Union (EU) commission's approval under competition law.

With this clearance of the competition authority, Lufthansa Group is now able to acquire a minority stake of 41% in ITA Airways and the subsequent acquisition of the remaining shares for a capital contribution of EUR325 million ($474 million), which was agreed upon in May. The investment will be completed through a capital increase.

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The transaction, which is expected to close in the fourth quarter of 2024, requires both the prior implementation of the remedies negotiated with the EU commission and the approval of other competition authorities outside the EU. Options for the acquisition of the remaining shares in ITA Airways have been agreed between Lufthansa Group and MEF and can be exercised from 2025 at the earliest.

More on ITA Airways’s integration

ITA Airways was founded in November 2020 and currently serves a total of 69 destinations with around 4,860 employees. Based in Rome, the airline carried almost 15 million passengers last year and has a modern fleet of 96 Airbus aircraft, including 23 long-haul and 73 short-haul aircraft.

Rome-Fiumicino Airport, which was awarded with five Skytrax stars in 2023, will thus become the Lufthansa Group's sixth and geographically southernmost hub. Lufthansa Group and ITA Airways will also jointly plan a swift integration of ITA Airways’s almost 5,000 employees.

Italy will also become the Lufthansa Group's fifth "home market", and Lufthansa Group's second largest market in terms of revenue after Germany and the US. Presently, Italy is already the second most important market for the company outside its home markets after the US.

Immediately after the closing, the route networks of both airlines will be linked with each other through code sharing, allowing customers to combine the airlines' offers. This will create over 1,000 new transfer options, creating many more options to destinations in South America, North Africa and the Middle East, in particular.

The approval of the authorities enables the cooperation between ITA Airways and Lufthansa Group on a commercial and operational level from the date of closing of the transaction. Until then, both companies will continue to act in competition.

Following intensive negotiations with the European Commission, the parties have agreed on a package of concessions. This includes the transfer of slots at Milan-Linate Airport to a competitor in short-haul traffic, while in neighbouring traffic between Italy and the Lufthansa Group's existing home markets, the competitor will take over single routes on which Lufthansa Group Airlines and ITA Airways still operate today as competitors.

Following the closing, ITA Airways will become the fifth network airline to be closely integrated with Lufthansa Group while keeping its brand name. As part of the multi-hub, multi-airline and multi-brand system successfully established by the Lufthansa Group, the Italian airline will utilise numerous synergies, for example in world-wide sales, its loyalty program; Miles and More, or also in aircraft and fuel purchasing.

Members of ITA Airways’s existing loyalty program ‘Volare’ will also be able to collect or use their miles with Miles and More from the first day after the closing. In addition, the respective lounges will be mutually accessible. Commercial processes, IT systems and purchasing processes will be harmonised as quickly as possible in order to exploit the numerous synergy effects.

Carsten Spohr, Chief Executive Officer (CEO) of Lufthansa Group, says: "The acquisition of ITA Airways strengthens the internationalisation of the Lufthansa Group. We offer our guests a significantly greater choice of connections and destinations, and with the five-star hub in Rome we are also extending our premium offering and better connecting strategic future markets south of the equator to our network. Despite the comprehensive and far-reaching concessions, the investment in ITA Airways strengthens the Lufthansa Group's position in global competition.”

As at 4.52 pm, shares in Lufthansa Group are trading 38 EUR cents higher or 0.64% up at EUR5.97.

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