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Italy Halts Sale of ITA Airways Stake to Lufthansa Amid Price Dispute

By  |  November 5, 2024
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Italy’s Treasury has put a temporary hold on the sale of a minority stake in ITA Airways to Lufthansa, due to a disagreement over the price, according to sources familiar with the situation. This pause follows an earlier agreement where Lufthansa had gained European antitrust clearance to acquire a 41% share in ITA for 325 million euros ($354 million), with hopes to expand its reach into southern Europe. However, new tensions have emerged over a 10 million euro discrepancy in the valuation, according to WMBD.

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    An Italian official, who requested anonymity, emphasized that the Treasury is standing firm on its valuation, indicating Italy would not agree to what they considered an “undersell” of ITA. The Italian government, they noted, is determined to secure a fair price that accurately reflects the airline’s market potential.

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    In July, Lufthansa’s acquisition of the 41% stake was seen as a strategic move to bolster its footprint in southern Europe, a region known for its lucrative tourism market. ITA Airways, formed as a successor to the defunct Alitalia, was seen as an ideal partner for Lufthansa’s European growth ambitions. However, Reuters reports that the ongoing dispute over the valuation threatens to delay this partnership.

    Related: European Commission Launches Investigation into German State Aid for Lufthansa

    According to another source, the final price could also affect a future purchase, as Lufthansa has the option to acquire a further stake in ITA in the coming years. This future transaction could be influenced by the price agreed upon for the initial 41%, potentially complicating matters further.

    Lufthansa responded to inquiries by emphasizing its commitment to the contract, including its agreement on concessions required by EU regulators. A company spokesperson stated that the airline had already agreed to specific remedies, including relinquishing certain flight slots to maintain fair competition. These terms were outlined in the proposal set to be submitted to the European Commission, which, as per Reuters’ source, has now been delayed due to the pricing dispute.

    Source: WMBD