Lufthansa, Front-Runner for ITA Airways Stake Sale?
Airlines Business / Finance

Lufthansa, Front-Runner for ITA Airways Stake Sale?

DALLAS — The privatization of ITA Airways (AZ) is about to accelerate, as the Italian government is ready to sell a minority stake in the company.

According to Reuters, the new Italian government abandoned the initial plan to sell a majority stake in the airline from the get-go. Now, the Treasury wants to offer a minority stake, most likely through a capital increase, before any actual privatization takes place.

The Italian Prime Minister approved a decree to sell the minority stake. While the government did not announce the buyer officially, Lufthansa Group (LH) is once again the front-runner for this purchase.

The airline’s CEO, Fabio Lazzerini, said talks with the German group were ongoing in a “very collaborative” way.

Further, the Italian newspaper Corriere della Sera states that the German airline group seeks to buy a 40% stake in AZ and that the deal is to be officially announced before the end of the year.

AZ operates Airbus A320 family aircraft on medium-haul routes. Photo: Alberto Cucini/Airways

Initial Privatization Offers

The Italian flag carrier was created in 2020 after the bankruptcy of Alitalia, the former Italian national airline. The government has owned the airline since then, but it has been trying to sell a majority stake in the airline since the beginning of the year.

The government was open to offers from any company until May 23, 2022. The favored offers were the bid from LH and the global logistics firm MSC, and the joint bid from Air France-KLM Group (AF-KLM), Delta Air Lines (DL), and Certares.

However, the government was not fully satisfied with the offers, as the companies were asked to improve their offers in August. Both offers were still being evaluated, but the LH one was mostly seen as the favorite.

The AZ Airbus A350 can seat up to 334 passengers in a three-class layout. Photo: Francesco Cecchetti/Airways

Difficult Negotiations

After an additional month, the government selected the AF-KLM, DL, and Certares joint bid and entered exclusive negotiations with the companies for the privatization of the Italian airline. However, these negotiations were not successful, and no deal was signed.

The other bid was ultimately abandoned. MSC announced it was not interested in the airline anymore. The change of government in Italy took place, and soon after, negotiations resumed. With the new decree, the Italian government is set to finally sell a stake in AZ.

Announcements from the government and LH are expected this week, which means we should be able to know more before the end of the year.

This is a developing story.

Featured image: The Airbus A350 is the flagship aircraft of AZ’s fleet. Photo: Yifei Yu/Airways

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