Lufthansa’s takeover of 41 percent of the Italian airline Ita Airways is facing new challenges.
Shortly before the planned conclusion of the deal, a dispute broke out between Lufthansa and the Italian Ministry of Economic Affairs, which is putting the project in jeopardy. According to reports, the ministry has put the deal on hold for the time being because Lufthansa is questioning the originally agreed purchase price. The airline argues that the value of Ita Airways has decreased in recent months and that it therefore wants to pay less than the agreed 603 million euros. According to Italian media reports, the company is trying to save a sum of around ten million euros.
Lufthansa and the Italian Ministry of Economy: Disagreement close to completion
The plan for Lufthansa to buy the Ita shares was signed by the Italian government in May 2023. With Lufthansa's entry, Italy aims to strategically strengthen the loss-making Ita Airways, which emerged from the insolvent Alitalia, and make it more competitive on the European market. Lufthansa originally planned to complete the takeover by the end of 2024, but the negotiations again encountered political obstacles and financial differences.
According to insiders, the German aviation group argues that the Italian airline's valuation is lower today than it was six months ago. The reasons for this could be the uncertain economic outlook, rising operating costs and ongoing operational problems at Ita Airways. The company has made heavy losses since its founding in 2021 and is under considerable pressure to cut its costs and enter new markets. However, when asked by airliners.de, Lufthansa spokespeople explained that the contract with Italy was legally binding and that Lufthansa would adhere to the agreements made. Nevertheless, the specific point of contention remains.
Political implications and EU requirements
The political side of the deal is also important. The Italian government has high hopes for the strategic partnership with Lufthansa, which is intended to put Ita Airways in a more stable position and at the same time secure Italian jobs. In addition, the planned entry of the German company would be a sign of increased European integration in air transport. However, the EU Commission has set clear conditions for approving the deal. These conditions include measures to ensure fair market conditions and the protection of jobs and social standards in the planned restructuring of Ita Airways.
According to a Lufthansa spokesman, the measures demanded by the EU Commission were recently signed by the airline and submitted for review. However, the Italian Ministry of Economy has reportedly refused to provide the required countersignature - a clear sign that the dispute is overshadowing the final phase of negotiations. According to Reuters sources, both sides are interested in resolving the conflict, but the next steps depend on the ongoing talks. Insiders believe that an agreement is still possible, but not without significant political compromises and financial adjustments.
The financial uncertainty at Ita Airways
Ita Airways is still suffering from the aftermath of the Alitalia bankruptcy and the need for structural reforms, which have so far been inadequately implemented. Since its founding, the airline has struggled to operate profitably. Although Ita has gained market share on busy routes in recent years, especially between European cities, the challenges remain. According to reports, the Italian Ministry of Economy originally wanted to sell up to 20 percent more shares in Lufthansa to generate additional revenue, but postponed this plan due to the stalled negotiations.
perspectives and possible scenarios
Lufthansa sees Ita Airways as an opportunity to expand its network in southern Europe and the Mediterranean. A successful entry would enable the group to integrate the Italian hubs more closely into its own network and increase transfer traffic, particularly between Europe and North America. According to industry analysts, the partnership could offer Lufthansa significant strategic advantages, which, however, could only be realized through a successful restructuring and strengthening of Ita Airways' operating business.
However, experts warn that a continued disagreement over the purchase price could undermine confidence in the partnership. A possible failure of the deal could significantly strain the relationship between Lufthansa and the Italian government and lead Ita Airways into an even more uncertain future. The next few weeks will therefore remain crucial to get the deal done and put Ita Airways on a more stable footing.
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