Buying ITA is a perfect way for Lufthansa to increase its network in Italy

Lufthansa’s interest in newly formed Italian flag carrier ITA Airways has been in the news several times in the first few months of the year. Germany’s national airline is eyeing a minority stake in ITA, which could represent as much as 40% of the business. Despite belonging to different airline alliances, a partnership between the two carriers could have a range of strategic benefits for those involved.

By the time February rolled around, the SkyTeam member had confirmed that it had received an approach by Lufthansa, as well as the MSC Group, a Swiss-Italian shipping line.

ITA Airways commenced operations in a difficult market, surrounded by the uncertainty of the coronavirus pandemic. This was likely a factor in the €170 million ($192 million) loss that it made in its first four months of operation. As such, Lufthansa and MSC’s investment represented a useful lifeline for the company, with the Italian government approving the sale last month.

Given ITA’s financial situation, we can see how Lufthansa’s presence would provide it with some much-needed economic backing. But what’s in it for the German flag carrier? As it happens, acquiring a stake in ITA is a perfect way for the airline to increase its presence in Italy. According to ch-aviation.com, CEO Carsten Spohr called Italy the world’s second most important strategic aviation market.

This statement shows the country’s value to Lufthansa. Of course, the German carrier already flies there itself, and also serves it through Air Dolomiti, a regional subsidiary. Nonetheless, a stake in the Italian flag carrier would massively boost this presence, and potentially offer codesharing possibilities on new routes for Lufthansa (and indeed vice versa for ITA).

Not planning to acquire a majority stake
As alluded to earlier, a figure of 40% has often been mentioned in discussions on Lufthansa’s interest in ITA. It now seems unlikely that it will want to acquire much more than this, given Spohr’s comments during an investors’ presentation. According to ch-aviation, a majority stake lies “far away” from his plans.

This approach contrasts with the MSC Group, whose founder, Gianluigi Aponte, states that “the most important thing for us is to have a majority share in ITA Airways. The Germans can come in as a commercial partner or minority shareholder. We want to manage ITA.” It will be interesting to see how the deal unfolds. ch-aviation & simpleflying.com