DALLAS – The European Commission's competition authority accepts the planned acquisition of 41% of Deutsche Lufthansa AG (LH) in ITA Airways (AZ), subject to specific requirements.
The transaction is set to be completed in Q4 2024, and a “swift integration into the Lufthansa Group is planned.” During the negotiations, the EU was concerned that LH would hurt competition by absorbing too much market share through the ITA merger.
With its brand name intact, AZ will now become the fifth network airline to be deeply integrated within the Lufthansa Group.
Conditions of the Approval
The EU Commission declared that the airline's approval was contingent upon fulfilling conditions to ensure competition. Additionally, Lufthansa and AZ should ensure adequate short—and long-haul flight competition through agreements with rival airlines.
Though financially sound, experts have said AZ's long-term survival as an independent entity was highly uncertain without this merger.
ITA soaring new heights (Image: Lufthansa Group)
Value of the LH-AZ Deal
Lufthansa had agreed with the Italian government at the end of May 2023 to purchase 41 percent of ITA for €325 million. In addition, options for a complete takeover have been defined at a later date.
Participation is carried out through a capital increase. The prerequisites for closing the deal are the prior implementation of the concessions negotiated with the EU Commission and the approval of other competition authorities outside the EU.
Access to the Italian Market
Currently, AZ still has about 4,500 employees. For comparison, the Lufthansa Group has almost 100,000 employees and has already integrated three former state airlines: Austrian Airlines (OS), SWISS (LX), and Brussels Airways (SN).
The brands and hubs in the home countries of Austria, Switzerland, and Belgium were preserved. Rome-Fiumicino will be the sixth and geographically southernmost hub of the Lufthansa Group. AZ is not the official legal successor of Alitalia but has secured the rights to the legendary name, which, according to corporate circles, could soon be revived.
Lufthansa CEO Carsten Spohr stated, “The entry at ITA Airways strengthens the internationalization of the Lufthansa Group. We offer our guests significantly more choice of connections and destinations. With the 5-star hub in Rome, we also expand our premium offer and better connect strategic future markets south of the equator to our network.”
He added, “Despite the comprehensive and far-reaching concessions, the participation in ITA Airways strengthens the position of the Lufthansa Group in global competition. We will make ITA Airways a strong and successful part of our company and thus secure its future as an international airline and strong brand. ITA Airways will support us in further expanding our position as the number 1 in Europe."
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December 2024
