Italy Selects Certares Bid for ITA Airways Negotiations

DALLAS - The Italian government announced today that it has picked the joint bid from Certares, Air France-KLM (AF/KL), and Delta Air Lines (DL) in order to sell ITA Airways (AZ). The bidders will now enter exclusive negotiations with the Italian government to purchase a majority stake in the airline.

This is the end of a long competition between the two major bidders for the airline. The deadline for the bids was set in May, and the government's financial advisors took a few months to study the proposals. At the beginning of August, the Italian government asked bidders to improve their offers and waited about a month before announcing the final winner today.

According to Reuters, the offer allows the government to keep at least a 40% stake in ITA and the right to appoint a chairperson. This means the government can keep decisive rights while gaining money and giving up its majority stake.

The offer is led by Certares, a private equity fund, which offered to buy a 60% stake in the airline for about €600m (US$696.5m). We do not know yet what stake AF/KLM and DL want to have in AZ, but they support the Certares offer and will act as commercial partners for the airline.

ITA Airways is only one year old, as it was created in 2021 after Alitalia's bankruptcy. Photo: Tony Bordelais/Airways

Lufthansa, MSC lose the deal

Lufthansa (LH) and MSC, a global shipping group, also had an offer for AZ and were seen as the front runner for a long time. Indeed, they offered more money for the airline, about 850 million euros, but for a larger 80% stake.

While the second offer helped the government make more money, it gave less power and control over the airline. This is a reason why the Italian Treasury selected the Certares bid.

Moreover, DL and AF/KLM are part of the airline alliance Skyteam, just like AZ, and the three airlines already have multiple partnerships together. However, LH is currently a competitor for AZ, and the German airline is not in the same alliance.

Italian Prime Minister Mario Draghi hopes to sign a preliminary deal by September 10. Still, it will be tough for his government to finish the transaction before the national election on September 25. This means the negotiations could be even more complicated in the coming months.

Featured Image: ITA Airways Airbus A330 (EI-EJO). Photo: Alberto Cucini/Airways