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Lufthansa may buy 40% stake in ITA Airways

written by Isabella Richards | January 24, 2022

A Lufthansa Airbus A380. (Rob Finlayson)
A Lufthansa Airbus A380. (Rob Finlayson)

Germany’s partly state-owned Lufthansa is in negotiations with Italia Trasporto Aereo (ITA) to purchase a stake in the company.

According to anonymous sources who spoke to Reuters, Lufthansa will potentially buy a 40 per cent stake with the successor of Italy’s Alitalia.

It comes only months after ITA began operations in October 2021, taking over Alitalia’s 90-year brand due to years of bankruptcy.

One source said the talks are still ongoing with numerous possible outcomes, and the stake price is still under negotiation.

Another source claimed Lufthansa and ITA were also discussing a 40 per cent stake sale, but the deal would be inked in the coming days, Reuters said.

After several years of dry cash flow, Alitalia became bankrupt in 2017, only surviving through state aid, and then in March 2020, it was officially owned by the Italian government.

After ongoing negotiations, the government proposed plans to remodel Alitalia to become ITA in late 2020, which was confirmed in July 2021.

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While ITA expected revenue to be above €3.3 billion by 2025, the company already faced a loss of €170 million since its operations began in October.

According to data from OAG and Australia’s CAPA from early January, ITA is considered the 17th largest airline by seats in Europe, and Lufthansa takes fourth place.

Lufthansa’s fleet is also 13 times bigger than ITA, and flies 12 times as many routes as ITA.

In September, ITA confirmed it had penned a memorandum of understanding (MoU) with Airbus to purchase seven A220 jets, 11 A320neo jets and 10 A330neos to begin operations.

ITA also signed a deal with Air Lease Corp for a long-term order of 31 Airbus aircraft, consisting of 15 A220s, two more A320neos, nine A321neos and five A330-900neos.

According to ITA’s chairman Alfredo Altavilla, his airline is a “pretty bachelorette” and hopes “Lufthansa will be one of those handsome and rich admirers who might be interested”.

The move also comes only two months after Lufthansa successfully repaid the last of its €9 billion in state aid back to the German government amid returning to pre-pandemic levels.

This will begin the process of the government selling its stake in the airline – which owned almost 16 per cent of the company – giving Lufthansa more control over its dealings, such as the potential ITA investment.

While the loss of Alitalia did not come as a shock to the industry, chairman Altavilla has indicated the brand may be resurrected for the commercial sector of the company.

Although it has not been confirmed, a final decision is set to be made by the board of directors on 31 January.

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