Italy Aims to Close ITA Airways Lufthansa Deal by April

The Italian Government hopes for mid-April approval of a final deal with Lufthansa for the sale of a minority stake in ITA Airways.



March 31, 2023

DALLAS — The Italian Government hopes for mid-April approval of a final deal for the sale of a minority stake in ITA Airways (AZ), as negotiations with the Lufthansa (LH) Group progress.

Lufthansa Group Chief Executive Officer (CEO) Carsten Spohr met in Rome with Economy Minister Giancarlo Giorgetti and AZ Chairman Antonino Turicchi, and the talks were "positive" according to a statement from the Treasury.

According to the Italian newspaper Corriere della sera, a deal could be signed between next April 19 and 21. Moreover, LH approved AZ's new industrial plan. This is an important step towards the final deal, as the business plan, which is kept secret by the companies, explains the strategy of AZ in terms of fleet, networks, and other details.

As announced in earlier negotiations, the deal would allow LH Group to buy a 40% stake in the new Italian airline, increasing to a majority share in the coming years. In December, the value of this minority stake was estimated between €200m and €250m. However, after the company revealed losses in its 2022 financial results, LH may want to negotiate a little more to reduce the price.

However, even if the deal is signed before the end of April, it would not be efficient before the summer. Indeed it will still need to be approved by various regulators, including the European Commission.

ITA operates Airbus A320 family aircraft on its European network. Photo: Alberto Cucini/Airways

ITA Airways

If this deal is signed, this would mark the end of long struggles from the Italian government to sell its new national flag carrier. Indeed, the new airline was created in 2021 just as the former flag carrier, Alitalia, ceased operations due to its bankruptcy.

The new airline took off in 2022, serving again major long-haul destinations in America and Asia while improving its European medium-haul network. The airline also decided to accelerate the renewal of its fleet, with a major aircraft order for modern Airbus A320neos, A220s, A330neos, and A350s.

The new Italian flag carrier is now trying to improve its efficiency and its financial results, despite posting losses for the last quarter of 2022.

Since the beginning of 2022, the Italian government has been trying to sell the airline to other companies. After the end of the bidding period, the government had the choice between the offer of a consortium from shipping company MSC and LH Group, against the joint offer of private investment firm Certares, Air France KLM, and Delta Air Lines (DL).

While the first offer was considered as a favorite, the second one was chosen to enter exclusive negotiations. However, these negotiations failed, as no deal was found before the end of the exclusivity period.

MSC then dropped interest in AZ, letting LH compete alone against the other bid. However, it was announced in November that LH was again the front-runner for the sale, and the German airline group proposed a deal at the beginning of the year. Negotiations with LH have been ongoing since then, but the news today confirms that AZ will most likely join the airline group.

Featured image: ITA Airways' new A350 EI-IFE in New York JFK. Photo: Francesco Cecchetti/Airways