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Lufthansa-ITA Airways Deal Back on Track After Last-Minute Negotiations

By  |  November 13, 2024
UE: Ryanair presenta queja vs. Lufthansa ante Comisión Europea

In a significant turn of events, Italian authorities and Lufthansa have reached a breakthrough agreement, reigniting a stalled merger deal between the German airline group and Italy’s national airline, ITA Airways. According to a statement, the deal saw a resolution just before a key European Union regulatory deadline, after intense discussions between Italy’s Ministry of Economy and Finance and Lufthansa executives.

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    Under the terms initially established in 2023, Lufthansa committed to an acquisition process involving ITA Airways, with plans for a gradual takeover totaling €829 million ($912 million). As part of this agreement, Lufthansa agreed to two major investment phases, the first of which saw the airline acquire a 41% stake in ITA Airways in May 2023 through an injection of €325 million ($358 million). The plan laid out a roadmap for Lufthansa to expand its ownership to 100% by 2033 through further phased investments.

    However, on November 7, 2024, sources reported by AeroTime indicated that negotiations hit a major stumbling block. Lufthansa had reportedly requested a reduction in the second payment tranche, seeking a discount of around €10 million ($11 million) from the originally agreed €325 million. This last-minute request was met with resistance from the Italian government, which led to an impasse in talks and risked derailing the entire deal. Per a statement, the Italian Minister of Economy and Finance, Giancarlo Giorgetti, responded by arranging an urgent meeting with Lufthansa’s CEO, Carsten Spohr, on November 11, the day before the deadline set by the European Union to confirm the transaction’s viability.

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

    In an intense final round of negotiations on the night of November 11, the Italian government and Lufthansa came to an agreement, bypassing the potential collapse of the acquisition. The breakthrough allowed both parties to finalize terms just in time to submit them to EU regulators by the deadline. This submission will now require approval from the European Commission, which will conduct a thorough review to ensure the deal complies with competition laws.

    Italian news outlets reported that Lufthansa’s proposed €10 million discount on the second tranche had been ultimately rejected, but both parties managed to align on a mutually acceptable framework. The second tranche in question accounts for a 49% stake in ITA Airways, a significant portion of the total investment.

    If the EU gives the green light, Lufthansa will gain full ownership of ITA Airways, expanding its reach in the European aviation market and providing Italy’s struggling flag carrier with the backing of one of Europe’s largest airline groups.

    Source: Aerotime