OUR Italian The government has started formal negotiations with Lufthansafor sale 40% of the airline ITAconfirmed by the Italian Ministry of Finance.

The German company’s proposal is considered compatible with the Italian government’s decision to privatize ITA. The signing of the preliminary agreement is expected in March, and the final one in June, according to APE-MPE.

As early as spring, Lufthansa will have a decisive stake in ITA’s commercial options, and in the medium term, it is likely to continue buying the majority stake in the Italian airline, which was created after the closure of Alitalia.

Lufthansa plan

In 2021 when Alitalia went out of business after decades of losses and repeatedly “tried” bankruptcy, it was the end of an era. Chosen by celebrities and dignitaries, Italy’s national flag carrier has been reborn as ITA, a 52-aircraft airline (compared to Alitalia’s 160 in the mid-1990s), government-supported and essential in terms of services and personnel.

OUR Lufthansa recently filed an interest in the ITA and now it remains to be said about his plans for the Italian airline, whether it retains any elements of its former glory and, of course, whether Rome will indeed hand over the reins. The question is what happened to Alitalia. Although the airline has always struggled to make a profit, serious problems arose in the late 1990s when budget airlines began to gain momentum. Alitalia was meant to either strengthen the luxury segment or follow in the footsteps of low-cost airlines, but ultimately failed in both cases. It has since gone bankrupt twice, in 2008 and 2017, and while Air France, Etihad and others have invested heavily in Alitalia, the airline was forced to cease operations in 2021 when it was “reborn” as ITA. With the ITA looking to turn a profit after 2024 and still unprofitable, former Italian Prime Minister Mario Draghi has put it up for sale again.

Germany’s largest airline initially intends to acquire up to 40% of ITA, with the remainder over time.

As for Lufthansa’s plan, the largest German carrier initially intends to acquire up to 40% of ITA, with the remainder over time. Lufthansa has also shown interest in the airline in the past, as this will allow it to enter the large European market on the one hand and expand transatlantic services with less competition on the other. After all, he indulged in a number of acquisitions. It acquired Austrian Airlines, Brussels Airlines and Swiss International Air Lines, three struggling flag carriers. In all three cases, it was willing to keep the original name, which is an incentive for politicians who want to keep the status of the national airline. While these airlines do not always perform well economically, they do serve Frankfurt and Munich, which are bases for transatlantic traffic.

As for the prospects for its competition plan, the Commission must first approve the acquisition. He will also have to ensure that ticket prices do not rise sharply, which could force Lufthansa to forgo some seats on planes at major German airports. However, there may not be many interested buyers as Ryanair and EasyJet have already cut their routes to Germany due to relatively high airport charges. In any case, according to Bloomberg, even if there is some increase in ticket prices, passengers will understand this, but it will be difficult to prove that this is unfair.

Alitalia is the national airline of Italy. The Italian government wants to retain a majority stake in the first phase of the takeover to control the transition. While Lufthansa has the option to acquire 100% of the company’s shares, Italy will still have a say in the business plans as ITA operates in a sector of strategic importance. The Italians “digested” the fact that the national carrier is deeply unprofitable. Its sale to a German company draws backlash from those who see the symbolic importance of owning a national carrier. However, relief from the removal of an asset that requires continued financial support is expected to prevail.