From left to right, ITA President Angelo Turicchi, Italian Economy Minister Giancarlo Giorgetti and Lufthansa’s CEO Carsten Spohr pose for a photo after a press conference where they explained the deal between Lufthansa and ITA in Rome, Wednesday, July 3, 2024. (Roberto Monaldo/LaPresse via AP)
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The EU’s powerful competition regulator said on Wednesday it had conditionally approved German airline Lufthansa’s proposed stake in ITA Airways, a deal Italy called a “great European success”.
Lufthansa, one of Europe’s largest airlines, agreed last year to pay 325 million euros ($350 million) for a 41 percent stake in ITA, with the Italian Finance Ministry also contributing 250 million euros as part of the capital increase .
The deal offered the German airline several options to increase its stake in ITA Airways – the successor to state-owned Alitalia – or to fully acquire it at a later date.
But the country has faced a turbulent process to gain regulatory approval after the European Commission opened an in-depth investigation in January over fears it could harm competition.
The commission has now given the green light after Lufthansa and the Italian government offered a package of commitments to address these concerns.
“Despite the comprehensive and far-reaching concessions, the investment in ITA Airways strengthens the Lufthansa Group’s position in global competition,” Lufthansa CEO Carsten Spohr said in a statement.
“This positive conclusion is a real success,” Italian Economy Minister Giancarlo Giorgetti said at a press conference in Rome.
“It has been a complicated, troubled and difficult path, but… it is a great Italian success, it is a great German success, it is a great European success,” Giorgetti said.
– ‘Improved connections’ – The remedies offered that helped seal the deal included allowing one or two rival airlines to launch non-stop flights between Rome and Milan and central Europe, the commission said.
“These commitments fully address the competitive concerns identified by the commission,” the report said. “The decision is conditional on full compliance with the commitments.”
The take-off and landing slots at Milan-Linate Airport will also be transferred to competing airlines for short-haul routes.
Other commitments to be met include concluding agreements with rivals “to improve their competitiveness on the long-haul routes of concern”, between Italy and the United States and Canada.
This could include, for example, swapping slots at airports or interlining agreements, which means that airlines collaborate with each other on certain aspects of travel, such as ticketing.
“This will lead to higher frequencies of non-stop flights and/or improved connections for one-stop flights on each of the routes,” the committee said.
– Avoid higher prices –
ITA Airways was created from the ashes of Alitalia, which was placed under public administration in 2017.
Alitalia had accumulated losses of 11.4 billion euros between 2000 and 2020. It eventually closed in October 2021 before being reborn as ITA.
The EU wanted to ensure that the Lufthansa deal would not lead to higher prices for consumers.
Brussels was concerned that there would be limited competition on some short-haul routes between Italy and Central Europe and on long-haul routes between the United States and Canada, leading to a reduction in quality for passengers.
“At a time when consumers are facing increasingly higher prices for air travel, it is vital to maintain competition in the sector,” said EU competition chief Margrethe Vestager.
“The package of solutions proposed by Lufthansa and the (ministry) regarding this cross-border deal fully addresses our competitive concerns by ensuring that sufficient competitive pressure remains on all relevant routes,” she added.
