Aviation group is growing: Lufthansa joins Airline Ita: What is changing

After years of negotiations, the Lufthansa Group will officially join the Italian state airline Ita this Monday (January 13th). A lot will change for management and crews, not least because of the EU competition requirements, but there will also be drastic changes for passengers. In Italy, however, the Germans’ entry into the proud Italian airline is not viewed entirely positively.

What did the partners agree?

Lufthansa will initially receive 41 percent of Ita shares for a capital contribution of 325 million euros. This step is scheduled to be officially completed on Monday. It has been agreed with the Italian Ministry of Economy and Finance that the Germans can take over the company completely in two further steps if the numbers are correct. The Italian state would still be on board if Lufthansa took over the majority with 90 percent in the second step. The complete takeover could then follow by 2033, for which a total sum of 830 million euros is being traded.

What role did the EU Commission play? Under pressure from the EU Commission, the Lufthansa Group made concessions in order to limit the market power of the new alliance. Take-off and landing rights in Milan and Rome had to be given to competitors. In addition, Ita has already canceled three routes to North America and will in future have to give preference to passengers from its competitor International Airlines Group (IAG), the parent company of British Airways and Iberia, and Air France to their hubs.

What does this mean for customers?

First of all, Lufthansa could “optimize” the offer between Italy and its other home markets. For customers, this could mean higher prices with roughly the same amount of space available. The EU wants to create competition here with its requirements. On short- and medium-haul flights, the low-cost airline Easyjet, which is already active in Italy, will play a central role and is establishing two additional bases in Rome-Fiumicino and Milan-Linate with eight aircraft. From there, 27 new routes will be offered, six of them to Germany. Destinations are Munich, Hamburg, Frankfurt and Düsseldorf.

According to Lufthansa strategists, Ita no longer has anything in common with its loss-making predecessor Alitalia. Lufthansa boss Carsten Spohr described Italia Trasporto Aereo (Ita), founded in 2020, with its ultra-modern Airbus fleet as a “startup in the middle development phase”. Ita boss Antonino Turicchi has forecast sales of 3 billion euros and a small operating profit of 40 million euros for the 2024 financial year. Further savings should also be possible within the group.

Who will be the boss of the new Ita?

Lufthansa strategy chief Jörg Eberhart, who has headed the regional subsidiary Air Dolomiti, which is active in northern Italy, for almost eight years, is being discussed as the new Ita boss in the group. The manager also played a central role in the takeover negotiations. The election of the new, five-member management board is planned for the first Ita shareholders’ meeting after Lufthansa’s entry.

What will change for Ita passengers?

For Ita’s current customers, who regularly include Pope Francis because of his trips abroad, many little things about the flight are changing. With the change from the Skyteam airline alliance to the Star Alliance, which is dominated by Lufthansa, partner companies for any onward flights will change, as will the infrastructure provided such as lounges at the airport. Lufthansa wants to integrate Ita regular customers from the Volare frequent flyer program into its own Miles&More, and corresponding offers for evaluating status and miles should come soon.

What do Italians think about the German entry?

The Germans’ entry into the proud Italian airline is not met with universal approval among Italians: for some it is a serious insult that a powerful German company is buying into Italy’s state airline. The satirical supplement of the daily newspaper “La Stampa” recently mockingly depicted a new Ita machine as an oversized sausage, with the black, red and gold lettering: “The New Alitalia – Enough with the spaghetti eaters.”

Italian politicians also did not want to be shown to be completely powerless at the end of the negotiations shortly before the deal was concluded. In the final phase of the price negotiations, the ministry in Rome threatened to cancel the deal. When Lufthansa wanted to lower the price for the second tranche at the last second, the ministry said: “Italy will not sell off its company.” In the end, however, an agreement was reached. What does Lufthansa plan to do with Ita and Rome Airport?

First of all, Lufthansa is buying a piece of the lucrative aviation market in Italy with the deal. With currently almost 100 aircraft, Ita will immediately become the largest foreign company in the group. As the third largest EU economy, Italy has traditionally had strong ties to America and is also one of the top destinations for numerous international tourists.

The modern Rome Fiumicino Airport will become the sixth and southernmost hub in the sprawling Lufthansa group, which already brings together the former state airlines from Germany, Austria, Belgium and Switzerland under its roof. Spohr is primarily looking at expanding the network towards South America, but Africa and Asia also offer market opportunities.

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