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Lufthansa to partially takeover Italy's ITA Airlines by year end
Published : 27 May 2023, 02:17
Updated : 27 May 2023, 02:33
Germany's Lufthansa Group will acquire a 41-percent stake in Italy's state-owned ITA Airways by the end of the year, with options to acquire the remaining 59 percent at some point in the future, Lufthansa's chief executive officer (CEO) said Friday, reported Xinhua.
The deal was reached on Thursday after months of negotiations.
The transaction would be financed at least in part by a Lufthansa capital increase of 325 million euros (347 million U.S. dollars), Lufthansa CEO Carsten Spohr told financial analysts and reporters on Friday.
He added that it would take several months to complete the deal.
"The closure of the transaction between Lufthansa and the (Italian) Treasury for the sale of a minority stake in ITA Airways by the German group is expected by the end of this year," Spohr said.
Once the deal is completed, Lufthansa will nominate ITA Airways' chief executive officer and will fill one of the seats on the company's five-member board of directors.
The agreement stipulates that the purchase price will not be paid to the Italian Treasury but rather be invested in ITA Airways in order to modernize the carrier and make it more competitive, Spohr said.
The Italian government has committed to investing another 250 million euros (268 million U.S. dollars) in ITA Airways.
With the move, ITA Airways is on its way to becoming part of the group of regional air carriers owned or controlled by Lufthansa, including Austrian Airlines, Brussels Airlines, Eurowings, and the Swiss International Airlines.
Lufthansa said that aside from operating some long-haul flights to North and South America, Africa, and some Asian destinations, ITA Airways will develop into a smaller regional carrier serving Italian and Mediterranean destinations and otherwise feeding into the Lufthansa network.
ITA Airways will also become part of the Star Alliance, the world's largest airline alliance in terms of annual passenger count. Until now, ITA Airways had been a member of SkyTeam, the second-largest airline alliance.
ITA Airways was created in 2021 to replace bankrupt Alitalia, Italy's previous flagship air carrier. This is when the Italian Treasury became ITA Airways' sole shareholder.
While Alitalia was notoriously unprofitable -- it turned a profit in only once during its last 15 years of operation -- Spohr said none of that legacy remains with ITA Airways.
The company "has no relations or problems linked to the old Alitalia," he said, adding that the company had been "completely restructured and configured to be a modern and competitive airline from the cost point of view."