German airline Lufthansa signs deal for minority stake in Italy’s struggling ITA Airways

MILANO– German airline Lufthansa on Thursday signed an agreement with the Italian government for a 41% minority stake in ITA Airways, formerly in difficulty, Alitalia.

The agreement includes investments of 575 million euros in capital increases, 325 million euros from Lufthansa and the rest from the Italian Ministry of Finance, providing capital for growth. Lufthansa will also have the option to purchase the remaining shares at a later date.

Lufthansa’s industrial plan for the Italian carrier projects revenues of 2.5 billion euros ($2.68 billion) this year, rising to 4.1 billion euros in 2027, the Italian finance ministry said. in a press release. During this period, Lufthansa plans to expand the ITA fleet from 71 aircraft to 94 and increase the workforce to 5,500 employees from the current 4,000.

Once the agreement is concluded, ITA Airways would become the fifth carrier of the Lufthansa Group.

As part of this strategy, Rome Fiumicino Airport will become one of the hubs of the Lufthansa Group, with ITA Airways focusing on long-haul flights. Lufthansa CEO Carsten Spohr also said Milan, Italy’s commercial and financial hub, has growth potential.

The deal must be approved by EU competition authorities.

ITA Airways and its predecessor Alitalia have long sought an industry partner, as the Italian airline has lost domestic and European routes to low-cost carriers. A series of deals with potential and actual partners had all failed over the past 15 years.

The ITA was officially launched in October 2021 after bankrupt flag carrier Alitalia landed its last flight, ending a 74-year run that over the following years has been characterized by financial uncertainty and has sunk into bankruptcy.

Lufthansa was the only airline to submit a bid in the latest tender earlier this year. The German airline has identified Italy as its third most important market, after Germany and the United States, citing its trade ties and strong export economy as well as its appeal as a tourist destination.

The German airline already operates Air Dolomiti in northern Italy, funneling long-distance traffic from cities like Milan, Verona and Venice to routes in Munich and Frankfurt.