Delta considering stake in Italy’s ITA – report

Delta Air Lines (DL, Atlanta Hartsfield Jackson) is evaluating the possibility of buying a stake in Italy’s reborn state-owned flag carrier ITA Airways (AZ, Milan Linate) as a strategic move to raise its profile in the European market, an unnamed Italian government source told the daily La Repubblica.

On November 19, the two airlines applied with the US Department of Transportation (DOT) to “engage in worldwide reciprocal codesharing services” across each other’s international networks. The report in La Repubblica appeared the day before, November 18. The sources said they were “aware of a first prudent survey by the American carrier” in ITA, without mentioning specific details.

Delta was a historical ally of ITA predecessor Alitalia in the Skyteam alliance and the news report followed an article in Corriere della Sera earlier this month in which sources claimed that Air France-KLM CEO Benjamin Smith had flown secretly to Rome to meet ITA Airways’ president Alfredo Altavilla and government officials, allegedly at the behest of Delta. ITA was welcomed into the alliance last month, replacing Alitalia.

The source told La Repubblica that Delta had also noted how well Italy had managed the pandemic, with its “green pass” mechanism and high vaccination rates guaranteeing a strong recovery in air traffic. Capacity in the Italian market for October was 26.5% higher than in October 2020, according to the Italian civil aviation authority (Ente Nazionale per l’Aviazione Civile – ENAC), and October 29 and 30 equalled the same days in 2019.

With this context, Delta believes ITA has the right economic fundamentals in place, with 2,800 employees instead of Alitalia’s 10,000-plus, salaries controlled under new contracts, 52 aircraft to start with, and no debt.

Up to now in Europe, Delta has focused on its transatlantic joint venture with Air France-KLM and Virgin Atlantic, but this is bound by rigid internal management rules, so Delta is considering a forward leap in its presence in the European Union that would proceed through targeted shareholding acquisitions, according to the source. But a deal would not be certain, as Rome is reportedly wary that a giant such as Delta may become too much of a commanding presence in ITA’s management.