Lufthansa Given Green Light for ITA Airways Takeover
Lufthansa has received approval from the European Commission to acquire ITA Airways after making several concessions in their takeover bid, with the airline set to soon leave SkyTeam for Star Alliance.
Takeover bid
Lufthansa’s bid to acquire a controlling stake of 41% in Italian flagship carrier ITA Airways has been formally approved by the European Commission.
The transaction, which is worth 325 million euro, is set to be completed in the fourth quarter of 2024.
ITA Airways will then formally join the Lufthansa Group, which includes Lufthansa, Austrian Airlines, Swiss, Brussels Airlines, Discover Airlines, and Eurowings.
Concessions
To gain approval for the takeover from the European Commission and antitrust bodies, the Lufthansa Group and the Italian Ministry of Economy and Finance, the current owner of all stakes in ITA Airways, had to make several concessions.
The European Commission feared that by acquiring ITA Airways, the Lufthansa Group would otherwise become too dominant in the Italian aviation sector, reducing competition and ultimately harming the interests of local passengers.
The approved takeover bid is therefore conditional on Lufthansa and ITA Airways making certain concessions.
Among other concessions, ITA Airways must give up some slots at its secondary hub, Milan Linate Airport, which will be allocated to other airlines.
Transatlantic joint venture
Since Lufthansa also plans to include ITA Airways in its joint venture with United Airlines and Air Canada, the European Commission feared that the airline group would become too dominant in the lucrative transatlantic market.
On these long-haul routes, Lufthansa and ITA Airways will need to make concessions to rival airline groups, such as Air France-KLM with their partner Delta, or the International Airlines Group (IAG) led by British Airways.
The European Commission noted that this could be accomplished by having ITA Airways give up more slots at Italian airports to their competitors.
Under supervision of the European Commission, an independent trustee will monitor the implementation of these concessions, after which Lufthansa’s acquisition of a controlling stake in ITA Airways can be finalised.
Lufthansa plans
According to a Lufthansa press release, their takeover of ITA Airways is expected to be fully completed “in the fourth quarter of 2024”.
Once the deal is finalised, the Italian flag carrier will be “closely integrated with Lufthansa Group while keeping its brand name ITA Airways”.
ITA Airways’ frequent flyer programme ‘Volare’ will eventually be phased out, as the airline will adopt Miles&More, Lufthansa’s own frequent flyer programme in the future.
Alliance change
Once the takeover of ITA Airways by Lufthansa is fully completed, the airline will eventually exit the SkyTeam alliance and become fully integrated into Star Alliance.
There is no timeline set for this, with a Lufthansa press release only indicating that this will happen in the “near future”.
However, ITA Airways frequent flyers will be able to collect or use miles in the Volare programme with Lufthansa Group airlines from the first day after the acquisition is formally completed, according to the Lufthansa press release.
At this point, ITA Airways’ business lounges will also be fully accessible to frequent flyers with a high enough status in Lufthansa’s Miles&More programme.
This typically means that from that moment onwards, SkyTeam frequent flyers will no longer be able to earn miles while flying with ITA Airways, nor use their status benefits to access lounges or receive free checked luggage when travelling with the Italian flag carrier, although this has yet to be confirmed.
While ITA Airways will leave SkyTeam to join Star Alliance, Scandinavian airline SAS will make the opposite move, joining SkyTeam on 1st September.
Conclusion
Lufthansa has been given the green light by the European Commission to buy a controlling stake in ITA Airways.
However, ITA Airways will be required to give up slots at Milan Linate Airport and make concessions to rival airlines to increase competition on certain long-haul routes, including the lucrative transatlantic market.
Once these concessions have been fully implemented, Lufthansa can finalise its takeover of ITA Airways, which is expected to happen in the fourth quarter of 2024, and from that moment on the airline will be fully integrated into the Lufthansa Group and Star Alliance.
