Lufthansa and Italy’s MEF in Stalemate Over ITA Airways Deal
Lufthansa Group has declined to comment on reports of a potential impasse with Italy’s Ministry of Economy and Finance (MEF) over the acquisition of ITA Airways (AZ, Rome Fiumicino). Allegedly, CEO Carsten Spohr and Italy’s Minister of Economy and Finance, Giancarlo Giorgetti, are set to meet this weekend to address concerns surrounding the deal, which is reportedly on the verge of collapse due to disagreements over payment terms.
On November 5, Reuters reported that the MEF had put the deal on hold, allegedly because Lufthansa sought to pay less than previously agreed. This development came shortly before the deadline for submitting a remedy package to the European Commission on November 4, which is a critical step for the merger’s approval.
In response to these reports, a Lufthansa Group spokesperson confirmed that the airline was adhering to the terms of the 2023 agreement, which includes acquiring an initial 41% stake in ITA Airways. The spokesperson emphasized that Lufthansa had signed the necessary remedy package by the agreed deadline. Despite this, the airline declined to provide further details on the situation, citing the ongoing nature of the negotiations.
The dispute reportedly centers on a clause related to the second tranche payment, amounting to EUR603 million (USD650 million), which Lufthansa is obligated to make following ITA’s first capital increase. According to sources close to the negotiations, Lufthansa is concerned about a decline in ITA’s value and may attempt to reduce this payment. These concerns have come to light just as the European Commission was set to review the remedy package required for final approval of the acquisition.
On November 7, Giorgetti remarked that it would be beneficial to meet with Spohr, signaling a potential resolution to the issue. Meanwhile, Italy’s Corriere della Sera newspaper reported earlier in the week that the deal was at risk of collapsing, casting uncertainty over the future of the merger.
Lufthansa has been in talks with the Italian government for several years over the acquisition of ITA Airways, which was formed after the privatization of Alitalia in 2020. The airline group initially agreed to acquire a 41% stake in ITA, with the option to increase this share in the future. However, the ongoing discussions about payment terms have created roadblocks in finalizing the deal.
The acquisition of ITA Airways is seen as a key move for Lufthansa Group in expanding its presence in the European market. ITA, which currently operates a fleet of around 70 aircraft, serves domestic and international routes, and the partnership would offer Lufthansa enhanced access to Italy’s lucrative aviation market. However, the delay and complications surrounding the deal could impact Lufthansa’s growth plans in the region.
As negotiations continue, all eyes will be on the upcoming meeting between Spohr and Giorgetti, with hopes that an agreement can be reached that satisfies both parties and ensures the successful acquisition of ITA Airways by Lufthansa Group.
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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com