Lufthansa swoops on new Italian flag-carrier ITA

The Italian government is keen to sell off Alitalia’s successor by the end of this year.

By Bloomberg News, July 5 2022
Lufthansa swoops on new Italian flag-carrier ITA

Lufthansa is circling Italy’s ITA Airways – the state-backed reboot of Alitalia – with the Italian government receiving a bid from the Germam carrier and its consortium partner, container giant MSC Mediterranean Shipping Co, according to people familiar with the matter.

If successful, Rome would become the Lufthansa group’s fifth hub, serving as a southern European hub alongside Frankfurt, Munich, Zurich (under Swiss) and Vienna (under Austrian Airlines).

The Lufthansa-MSC bid is up against another headed by US-based  travel and tourism-focused investment firm Certares Management.

However, both offers are about €200 million lower than the initial ones, said one of the people who declined to be named because the negotiations are not public.

ITA expects to close the transaction by the end of the year, Chief Executive Officer Fabio Lazzerini said last month.

Aeroporti di Roma CEO Marco Troncone has previously endorsed Lufthansa’s plans, saying “we are very positive about the Lufthansa business model. The company has extensive experience in dealing with post-crisis carriers and managing multiple hubs.”

Troncone said that a Lufthansa-ITA combination would bolster Rome Fiumicino’s status as a long-haul hub from the Mediterranean region to North America, Asia and Middle East, while also boosting domestic markets.

Rome’s location in central Italy puts it beyond the immediate catchment areas of Lufthansa’s Munich hub, which has competed with more northerly airports including those in Milan.

ITA needs to team up with a larger carrier to boost revenue, while Fiumicino would benefit from being Lufthansa’s new interchange for southern Europe.

Rome as southern European hub

"When it comes to investments, we are only interested in restructured airlines, and we believe ITA is one of them” Lufthansa CEO Carsten Spohr told a news conference in May.

Spohr said Italy was already Lufthansa's most important market in Europe, and globally its second largest after the United States, as it is the biggest intercontinental carrier for both Italians and people travelling to the country from abroad.

“Rome could play a very important role within Lufthansa,” he added, serving as a hub in southern Europe to complement Lufthansa's existing strong network in the north.

Lufthansa’s muscle-bound partner in a potential bid valued at up to €1.5 billion is Mediterranean Shipping Co, the world’s largest container shipping line – its fortunes buoyed by a surge in shipping fees during the pandemic – which also controls MSC Cruises, the world’s third-largest cruise brand.

Air France, Delta also in the wings

Also in the running is a consortium of Delta Air Lines, Air France-KLM and US fund Certares Management.

“Air France-KLM is in the lead in terms of actually making a potential investment,” clarified Delta CEO Ed Bastian, speaking with reporters in March. “We’re providing strategic support through our partnership.”

ITA predecessor Alitalia was a long-standing member of the Delta-led joint venture on trans-Atlantic flights, something Bastian said couldn’t be the case with ITA if the Italian firm were to partner with a competitor such as Lufthansa, which alongside United Airlines competes in the Europe-U.S. market against Delta, Air France-KLM and Virgin Atlantic.

A bid for ITA could herald another chapter in the decades-long saga of Italy’s search for a viable national carrier. It comes as airlines seek to move beyond Covid-19, which has crushed demand for two years. The pandemic proved to be the final blow for Alitalia after it had already racked up debt.

ITA started flying in October, after replacing Italy's 75-year-old carrier Alitalia which was finally grounded after years of losses and failed rescue attempts.

The Italian government would retain a minority, non-controlling stake in the privatised ITA.

27 Apr 2017

Total posts 2

Wouldn't it be their 6th hub? 

I know BRU is a lot smaller than FRA/MUC/ZRH/VIE  but it's still a hub, and particularly useful for connecting to/from Francophone African countries

QF

11 Jul 2014

Total posts 836

What I find interesting is Air Malta have now teamed up with Ryan Air to create "Malta Air" words are backwards so is this the new way to make money and reduce costs, is it more beneficial to team up with someone like Wizz to reduce costings for ITA. Forward thinking to Australia and the horror stories coming out from Qantas passengers is it also better to fast forward into a lower cost base as well the same way? 

24 Aug 2011

Total posts 1144

If Lufthansa succeeds, Star's absolute domination of central and western Europe will be complete.  Skyteam will continue to have 2 large hubs (CDG,AMS) but they are at the western edge of Europe and located too close to one another to operate separately.  Meanwhile Oneworld would continue to have no significant hub in continental western or central Europe.

Qantas - Qantas Frequent Flyer

11 Oct 2014

Total posts 686

In my opinion, Lufthansa (LH) should be barred completely from taking an interest in ANY European carrier for the forseeable future. Despite EU Regulations not permitting member-state/countries operations from investing in airlines. LH continues to build a German fortress in the middle of Europe, which acts as a brake on competition, both domestically and internationally.

Remember, it was less than 12 months ago that LH was almost entirely bankrupt and gladly had its hand out for German Government subsidies totalling more than 10 billion Euro. As a consequence of that support, the German Government became a shareholder in Lufthansa - an still is. So, apart from EU Regulations, why should the German taxpayer be on the hook for LH's greedy attempt at expansion and market manipulation?  Shouldn't Casten Spohr's first responsibility to pay back / buy out the German Government 'too big to fail' investment?

Further, LH has become a de-facto LCC in any case. Just last week, it lost its treasured (and heavily marketed) 5 Star rating ~ and there are miles of reports on other aviation websites about sub-standard product - both hard and soft - and service on both international and domestic services. Couple this with with the ever extended proposed new First and Business class refits (big euros in itself) and the huge PRE-Covid investment in new frame technology (the ever elusive and regularly delayed B777-9 fleet), which is a mega-euro undertaking.

Given also that SAS - Scandinavian Air System has just filed for bankruptcy in the USA in the last day or two, I wouldn't be surprised to see LH 'have a go' at that as well.

One would be wise to remember - and question - the motives of the Italian Government who touted the formation and bankrolling of ITA as a profitable, debt-free replacement for a moribund Alitalia. ITA was supposed to be the Italian beacon carrier that would return Italian aviation back to profitability. So, now it seems it will be LH's saviour instead? Good luck with that.

Qantas - Qantas Frequent Flyer

10 Apr 2016

Total posts 59

Do we see a bid from IAG (BA) / Qatar in the offering!

Qantas - Qantas Frequent Flyer

11 Oct 2014

Total posts 686

... only if AAB's ego gets in the way.  

It is not too long ago that he bought Meridiana and turned it into Air Italy to complement Qatar Airways .. and then Air Italy subsequently fell apart.

He may develop a 'grand plan' to work through IAG, but I suspect that might be a tough sell in itself.

United Airlines - Mileage Plus

12 Sep 2011

Total posts 341

It was obvious - harks back to the not so old days of Lufthansa Italia

  Italy is a big market for the Lufthansa Gruppe, not only for Italians but also the Chinese who oversee CN operations in  IT operations and for IT operations in CN are overseen by Italians.


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