German airline Lufthansa’s bid to acquire a minority stake in Italy’s ITA Airways, Alitalia’s successor, has sparked speculation about further steps to rally an industry that is looking for a more profitable recovery from the pandemic. Many European airlines are trying to effectively compete with low-cost airlines, but are struggling because of their weak balance sheets, which can still be strengthened. And the path is nothing but mergers, as analysts point out. Although the aviation situation is improving and there is a revival in travel, and pilots are returning to the cockpit after the pandemic, there are problems for them. Many male and female pilots are concerned about their pay. In a recent poll cited by Reuters, half answered that they had not seen an increase in their income in the past five years. The survey was conducted by industry recruiter Goose and surveyed 1,184 pilots in the last quarter of 2022. Nearly two-thirds of respondents said they would like to change jobs in the next 12 months for better pay and conditions. In addition, 89% believe there will be a shortage of pilots in the next five years, compared to a corresponding figure of 66% in 2021.

In addition, Lufthansa’s actions may signal changes in the European aviation industry. “This could be the next step in the consolidation of European airlines,” Bernstein analyst Alex Irving said, citing TAP, the Portuguese state-owned airline, as a top target. Recall that the Portuguese government, which owns TAP, said it was considering the possibility of a final or partial sale of the business. Potential buyers include Lufthansa, Air France-KLM, British Airways and IAG, Iberia’s parent company, analysts say. “We are clearly focused on the ITA,” a Lufthansa spokesperson said. “However, at the same time, we are closely monitoring the consolidation in the European air travel market.” A possible candidate could be Sweden’s SAS (SAS.ST), which has been in bankruptcy since the summer, and British low-cost carrier easyJet could also be among the candidates. “For Lufthansa, the logic of acquiring easyJet would be excellent because it would strengthen its position in the UK, Paris-Orly and Geneva,” said industry analyst Ruxandra Harado-Deser at Kepler Cheuvreux.

For his part, Michael O’Leary, head of budget airline Ryanair, believes TAP will go to IAG, easyJet will be bought by either BA or Air France or both, and then Lufthansa will buy Wizz. But finally, airline executives say they are wary of risking takeovers and mergers in a business environment that remains hostile.