The European Commission (EC) has opened an investigation into Lufthansa’s proposed acquisition of an equity stake in Italian carrier ITA Airways, the successor to historical airline Alitalia, which ceased operations in 2021.
The proceedings are being undertaken under the umbrella of the EU Merger Regulation to review the implications for competition in the markets where the two airlines operate.
In May 2023, Lufthansa acquired 41% of ITA Airways for €325 million (US$349 million), with the other 59% remaining in the hands of the Italian government. If certain performance indicators are met by H1 2026, the German carrier could purchase the rest of ITA Airways from the Italian state for an additional €500 million (US$545 million).
The main areas of concern for European regulators center on the routes connecting Italy with Central Europe, where Lufthansa has a strong position, and the long-haul routes linking Italy to the United States, Canada, Japan and India, where there is concern Italian consumers could see a decrease in the number of competitive options offering a convenient connection, either nonstop or with one stopover.
Also under scrutiny is ITA’s perceived dominant position at Milan-Linate Airport (LIN). This airport is the closest to Milan’s downtown and used by domestic and short haul European flights.
Although the agreement was finalized in May 2023, Lufthansa officially notified the European authorities of its intention to acquire ITA Airways on November 30, 2024, and by January 8, 2024, it had sent a report addressing some of the Commission’s preliminary concerns.
However, these concerns have now been deemed insufficient by the European Commission, which now has 90 working days to review the case and issue a decision by June 6, 2024.