Lufthansa has formally submitted a bid to acquire a minority stake in ITA Airways to the Italian government. The bid also includes an option to purchase the remaining shares at a later date.
The Germany-based airline group, which includes Austrian Airlines, Brussels Airlines, Eurowings, Lufthansa, and SWISS, put forward a proposal to the Italian Ministry of Economy and Finance and wants to sign a Memorandum of Understanding (MoU) with the Ministry to continue negotiations on an exclusive basis.
“These talks would primarily focus on the form of a possible equity investment, the commercial and operational integration of ITA into the Lufthansa Airline Group, as well as resulting synergies. In case of a binding agreement is reached, its implementation would be subject to approval by the relevant authorities,” read the airline’s statement. “For Lufthansa Group, Italy is the most important market outside of its home markets and the US,” the announcement continued.
Previously, Lufthansa, together with shipping company MSC, was competing against a consortium comprised of Delta Air Lines, Air France-KLM, and the investment firm Certares to purchase ITA Airways. However, while the Italian government previously chose the latter, the Delta-AF-KLM-Certares group dropped its interest, leaving Lufthansa as the sole contender to acquire a stake in the Italian airline.
Born out of the ashes of Alitalia, ITA Airways was established in October 2021, when the then-Italian government agreed to a deal with the European Commission (EC) that would allow it to invest up to €1.35 billion ($1.46 billion). In November 2022, the total investment sum had already reached more than €1.1 billion ($1.1 billion), leaving little room for the government to help the airline stay afloat financially.
The estimated value of ITA Airways was rumored to be between €450 and €480 million ($488 and $520 million), per local media reports, which also indicated that the Italian government was looking to sign a MoU with Lufthansa to progress the deal. Furthermore, in late December 2022, local lawmakers passed a ruling that would allow interested parties to initially put forward a bid for a minority stake in ITA Airways and that only airline groups would be able to bid for the ailing Italian flag carrier.