Lufthansa, one of Europe's leading airlines, has received a nod from the European Union to purchase a 41% stake in Italy's ITA Airways for a whopping $350 million. This significant investment by Lufthansa comes after the German carrier agreed to cede certain routes and slots to address competition concerns raised by the EU's antitrust regulators. The deal, announced earlier today, will see Lufthansa take a controlling stake in ITA Airways, the successor to the state-owned Alitalia. The move is expected to bolster Lufthansa's presence in the lucrative southern European market and provide the German carrier with more access to key long-haul routes.
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As part of the deal, Lufthansa and the Italian government have offered a package of commitments to address competition concerns raised by the European Commission. These commitments include making it possible for one or two rival airlines to launch non-stop flights between Rome and Milan and central Europe, as well as allowing competitors to use some of ITA's slots at Milan's Linate airport. The deal has been hailed as a historic moment for Italy's aviation industry, with Italian Finance Minister Giancarlo Giorgetti stating that the deal will allow the Italian government to focus on developing ITA's routes "in the interest of the Italian economy." The minister also noted that Rome's Leonardo Da Vinci Airport would become the hub for routes to North America, Asia, and Africa, which are important for tourism.
However, the deal has not been without controversy. The European Commission has expressed concerns about the potential impact of the deal on competition in the Italian market, particularly on certain short- and long-haul routes. To address these concerns, Lufthansa has agreed to make significant concessions, including ceding routes and slots to competitors. Despite these concessions, Lufthansa CEO Carsten Spohr remains optimistic about the deal, stating that it "strengthens the Lufthansa Group's position in global competition." However, consumer groups have raised concerns about the potential impact of the deal on passengers, with Agustin Reyna, chief at BEUC, which represents consumers in 31 countries, stating that "the current lack of clarity leads us to fear that consumers could pay the price for this merger in terms of higher fares, less choice of routes, and degraded services."
The deal is one of three high-profile airline transactions in Europe, underscoring airlines' bid to boost scale to offset rising operating costs. The EU is also set to evaluate Air France-KLM's offer to take a 19.9% stake in Scandinavian carrier SAS. As Lufthansa moves forward with its acquisition of ITA Airways, it will be interesting to see how the deal plays out in the competitive European aviation market. With the potential for increased competition and improved services for passengers, the deal could prove to be a game-changer for both Lufthansa and ITA Airways.