Lufthansa moves forward with acquisition of ITA Airways with EU approval

02-12-24

The European Commission has granted its approval to the proposed remedial measures for Lufthansa's acquisition of a 41% stake in ITA Airways, valued at €325 million. This decision allows Lufthansa to move forward with its expansion strategy in the Southern European market, while ensuring fair competition in the European airline industry. 

As part of the commitments made, Lufthansa and the Italian Ministry of Economy and Finance have agreed to divest certain assets and rights to competing airlines. EasyJet, for example, will receive slots at Milan-Linate airport, allowing it to operate short-haul flights from Rome and Milan to specific destinations in Central Europe. In addition, agreements have been established with IAG (a group that includes Iberia and British Airways) and Air France-KLM to facilitate direct flights and improve one-stop flight connections from Italy to North America. 

The Commission has assessed and approved these corrective measures, considering that the beneficiary airlines are independent from Lufthansa and ITA Airways, have the necessary financial strength and a proven track record as viable competitors in the market. These actions seek to maintain an adequate level of competition on all routes affected by the merger. 

The approval of this transaction represents a significant step in the consolidation process of ITA Airways within the Lufthansa Group. Founded in October 2021 as the successor to Alitalia, ITA Airways has faced financial challenges that led the Italian government to seek a strategic partner to ensure its long-term viability. Lufthansa's investment not only provides crucial financial backing, but also integrates ITA into a wider global network, boosting its competitiveness in the international market. 

However, the deal has also raised concerns in the industry. Some analysts and industry players fear that the strict conditions imposed by the European Commission may deter future mergers and acquisitions in the airline industry. The need to cede routes and slots to competitors to obtain regulatory approvals could complicate and make consolidation processes more expensive, limiting growth opportunities for European airlines. 

In this context, other similar operations are under scrutiny. The European Commission is also evaluating IAG's proposed acquisition of Air Europa and Air France-KLM's possible investment in SAS. These decisions will be decisive for the future of consolidation in the European airline industry and could set precedents on the conditions necessary to maintain a balance between business expansion and the protection of competition. 

The approval of Lufthansa's acquisition of ITA Airways, subject to specific remedial measures, marks a milestone in the restructuring of the European airline industry. While it opens up new opportunities for the airlines involved, it also poses regulatory challenges that could influence future consolidations within the industry.