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Lufthansa Secures EU Approval for ITA Airways Stake Acquisition

 |  July 3, 2024

German airline Lufthansa has received the green light from the EU to acquire a 41% stake in Italy’s state-owned ITA Airways. The €325 million deal aims to bolster Lufthansa’s presence in Italy, one of Europe’s most lucrative travel markets.

The European Commission’s approval comes after a thorough antitrust investigation. The Commission concluded that the merger would not violate competition rules, dispelling months of uncertainty surrounding the agreement.

“At a time when consumers are facing increasingly higher prices for air travel, it is very important to preserve competition in the sector,” said Margrethe Vestager, the EU’s Executive Vice-President in charge of competition policy. “We needed to prevent passengers from paying more or facing fewer and lower quality air transport services on certain routes in and out of Italy. The package of remedies proposed by Lufthansa and the MEF on this cross-border deal fully addresses our competition concerns.”

As part of the approval conditions, Lufthansa and ITA have committed to offering certain short-haul routes in Italy to rival airlines, enabling them to initiate non-stop flights between Rome or Milan and specific airports in Central Europe. Lufthansa has confirmed ongoing talks with EasyJet and Spanish airline Volotea in this regard.

For long-haul flights, Lufthansa and ITA have agreed to collaborate with competitors to enhance connectivity and increase the frequency of non-stop flights. This cooperation includes transferring passengers and baggage between connecting flights and exchanging takeoff and landing slots with other airlines.

Related: Lufthansa Faces EU Antitrust Warning Over ITA Airways Stake Bid

The merger represents a significant achievement for the Meloni government, which has been keen on privatizing public companies to protect state finances. Despite the positive reception, the deal cannot be finalized until rival airlines agree to the proposed competition measures.

Some industry analysts have raised concerns about the financial burden ITA may impose on Lufthansa. Despite its valuable market access, ITA has struggled with profitability for decades. However, Lufthansa, which already operates several subsidiaries including Brussels Airlines, Austrian Airlines, and Swiss International Air Lines, remains optimistic.

Lufthansa CEO Carsten Spohr acknowledged the lengthy approval process, stating, “The approval took longer than expected, but the waiting was worth it.”

Source: WSJ