Lufthansa is not giving up on ITA Airways, despite Italy’s procrastination

Taking over from Alitalia more than a year ago, ITA Airways inherited its penchant for soap operas surrounding its takeover. Since the beginning of the year, there have been many turns for the appointment of the future industrial shareholder of the Italian state company, but the privatization was decided from the day of its creation. But buoyed by the appeal of the Italian market, ITA Airways continues to attract greed, particularly from Lufthansa and Air France-KLM.

In an interview with a German newspaper Die ZeitGroup CEO Carsten Spohr confirmed his ambitions “be more European”. Lufthansa has long targeted southern Europe after acquiring Swiss, Austrian Airlines and Brussels Airlines in the 2000s. Despite its failures in the Alitalia days, and then the Italian state’s rejection of previous bids for ITA Airways, Lufthansa has no intention of giving up. Carsten Spohr does not hide it. In that interview he says: “It’s no secret that Italy is one of the most important markets for us and we already have more people flying from the US to Italy than from Germany. Italy is economically strong and an attractive holiday destination. »

The boss of Lufthansa is convinced of the interest of such a takeover “It will open new prospects in the field of aviation not only for Lufthansa, but also for ITA and Italy. » However, he shows that he wants to remain discreet about his intentions “The golden rule of financial economics applies: you only talk openly about buying and selling when the time is right. » At the end of November, as the Ministry of Economy of the far-right president of the Italian Council of Ministers, Giorgia Meloni, announced, negotiations are underway. So Carsten Spohr appears to be armed with patience, as he sent a letter this summer to then-incumbent Mario Draghi, Italy’s prime minister, asking him to hurry and warn. “His patience is endless”.

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Solo offer?

Although these statements are laconic, they raise many questions. In its previous approaches to ITA Airways, Lufthansa partnered with local transport heavyweights, first in the maritime sector Italian-Swiss ship owner MSC, then in rail with Italian public railway group Ferrovie dello Stato (FS). But the latter two have since thrown in the towel. The German group therefore does not intend to go it alone, and although it has certainly proven its ability to access finance in the markets since last year, it has to repay or refinance its debt with the German state.

The rest largely depends on this unknown, especially determining the level of control that Lufthansa is aiming for. During its initial bid with MSC in January, a 40% stake was first mentioned, before Reuters reported that Lufthansa wanted 20% of the Italian public company’s equity, with its partner 60%. Estimates of the amount on offer have also fluctuated, from 1.4 billion euros at the start of the year, according to AFP, to 850 million euros a few months later, due to the then expected deterioration of the air market after the summer.

Later, a consortium formed by Certares Management, Delta Air Lines and Air France-KLM offered to buy about 56% of ITA for about 600 million euros, according to Italian press figures. He even thought he had won a bet in vain at the end of August. And finally, in November, when Lufthansa returned to the charge with Ferrovie dello Stato, the German group’s 51% stake was recorded for 250 million euros, and 29% by its partner.

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The Italian state wants to keep its weight

In all these configurations, the Italian State therefore retained a more or less significant, but always significant, stake in the capital of ITA Airways. Thus, Mario Draghi’s government has chosen to maintain its significant public presence. Giorgia Meloni’s government, in place since late October, appears less demanding, but still wants to retain 30-35% of the capital. Corriere della Sera. In turn, Lufthansa said in early November “Still interested in the real privatization of the airline”. However, will the German group have the ability to climb very high in the capital of ITA Airways without the support of a major partner?

Meanwhile, ITA Airways also has to deal with internal turmoil. Its president, Alfredo Altavilla, resigned after being rejected twice by the Italian state, and was replaced by Antonino Turicchi. And the company had to receive an injection of 400 million euros of public funds to survive the winter.

On the operational side, Fabio Lazzerini has been confirmed as general manager. As one of the managers of the Italian company said Gallerythe directive is to develop the company with the goal of reaching 96 aircraft in the fleet by the end of 2023 and let the Italian state take care of the privatization.