For years, Italy has been trying to privatize its struggling national carrier. This was the case when Alitalia existed, and it continued to be the case with the new version of the airline, ITA Airways.
Since ITA Airways was formed in 2021, the Italian government has been working on privatizing the airline. In 2023, Lufthansa Group expressed interest in acquiring a major stake in ITA Airways. For nearly two years now, that has been in process, as a deal first had to be negotiated, then it needed to get regulatory approval, etc.
Well, today is a huge day for European aviation. Lufthansa’s investment in ITA Airways has been completed, so ITA Airways is now officially a Lufthansa Group carrier!
In this post:
Lufthansa Group finalizes investment in ITA Airways
Lufthansa Group has acquired a 41% stake in ITA Airways for a capital contribution of €325 million, and the transaction was finalized today at a meeting for shareholders. Lufthansa Group also has the right to acquire the remaining shares of ITA Airways at a later date, and the plan is for that to happen, until Lufthansa owns 100% of the airline. It’s expected that the entire transaction could cost over €800 million.
With the company’s new ownership structure, Jörg Eberhart has been appointed CEO of the airline. He’s the former CEO of Air Dolomiti, Lufthansa’s longstanding Italian subsidiary. Meanwhile Sandro Pappalardo has been appointed President of ITA Airways. Meanwhile ITA Airways’ existing CEO, Fabio Lazzerini, will no longer be at the airline.
In order to get this deal approved, the airlines had to agree to some concessions. The biggest compromise is that Lufthansa and ITA Airways have to give up slots at Milan Linate Airport (LIN) to competitors, because otherwise the airlines would be too dominant there. For example, EasyJet has already announced that it’s setting up a base at the airport, and ITA Airways will even have to wet lease planes to EasyJet to make this happen.
Furthermore, Lufthansa and ITA Airways are responsible for ensuring there’s more competition out of Rome Fiumicino Airport (FCO), in particular to hubs of Star Alliance carriers in North America.
Here’s how Lufthansa Group CEO Carsten Spohr described this takeover when it received regulatory approval, several weeks back:
“The approval from Brussels is excellent news for ITA Airways and Lufthansa and especially for all passengers flying to and from Italy. We look forward to welcoming ITA Airways and its outstanding employees as a new member of our airline family very soon. The decision is also a clear signal for strong air traffic in Europe, which can successfully assert itself in global competition.”
“The acquisition of ITA Airways strengthens the internationalization of the Lufthansa Group. We offer our guests a significantly greater choice of connections and destinations, and with the 5-star hub in Rome we are also extending our premium offering and better connecting strategic future markets south of the equator to our network. Despite the comprehensive and far-reaching concessions, the investment in ITA Airways strengthens the Lufthansa Group’s position in global competition. We will make ITA Airways a strong and successful part of our company and thus secure its future as an international airline and strong brand. ITA Airways will support us in further expanding our position as Number One in Europe.”
ITA Airways becoming a Lufthansa Group airline
With Lufthansa’s investment in ITA Airways having closed, ITA Airways is expected to shortly start cooperating with Lufthansa Group on a commercial and operational level, to benefit from group synergies.
The plan is for ITA Airways to become the fifth network carrier in Lufthansa Group’s multi-brand and multi-hub system, complementing Lufthansa, SWISS, Austrian, and Brussels (and on top of that, Lufthansa Group has some further subsidiaries).
Furthermore, ITA Airways plans to use Miles & More as its frequent flyer program (replacing ITA Volare), and also plans to join the Star Alliance, though an exact timeline for that hasn’t yet been announced.
Lufthansa Group managed to negotiate that ITA Airways can join the Star Alliance transatlantic joint venture, allowing the Italian carrier to coordinate routes, schedules, and fares, with Air Canada, Lufthansa, SWISS, United, etc.
Italy is Lufthansa Group’s most important market outside the group’s home base countries and the United States, which is why this acquisition was so important to Lufthansa Group.
My take on Lufthansa’s ITA Airways investment
Where do we even begin here? First of all, let me acknowledge that I can appreciate how Italy is an important market for Lufthansa, and how investing in ITA Airways is the easiest way that Lufthansa can considerably grow market share there.
Historically Lufthansa’s biggest challenge in Italy has been competing with SkyTeam, between Alitalia and Air France-KLM. Alitalia belonged to SkyTeam, and ITA Airways had also joined the SkyTeam alliance when the new company was formed. With ITA Airways having cooperated with Air France-KLM and Delta, Lufthansa struggled to grow beyond its current position, especially for long haul service.
So this investment by Lufthansa largely seems to be about poaching market share in Italy from competitors. At the same time, Lufthansa has an uphill battle with making this investment work. Alitalia had been losing a lot of money for a very long time.
However, things are looking a bit better at ITA Airways. While the airline lost €486 million in its first year of operation (2022), the airline made a profit of €70 million in its second year of operation (2023), which is nothing short of a miracle for an Italian network carrier.
With that in mind, a few thoughts and questions:
- I’m curious what this means for Air Dolomiti, which is another Italian airline that Lufthansa already owns; will Air Dolomiti be merged into ITA Airways, or will it continue to operate independently?
- Even with Lufthansa initially only owning a minority stake in the airline, hopefully Lufthansa is put in charge of day-to-day operations, or else I could see co-owning the airline with the Italian government being challenging
- While Italy is a huge tourist destination, it’s a tough market for a global network carrier; the country doesn’t have great geography for transatlantic connections to Western Europe, Italy is more of a leisure-oriented destination, competition on short haul flights from ultra low cost carriers is fierce, etc.
- I am excited about ITA Airways joining Star Alliance, since this should be good in terms of award options (generally Star Alliance is better with partner awards than SkyTeam)
- Carsten Spohr is going to have an absolute ball with labor relations at ITA Airways, methinks!
Bottom line
Lufthansa Group has officially completed its investment in ITA Airways, as the German airline group now owns a 41% stake in Italy’s national carrier. The plan is for Lufthansa to progressively increase its investment in the airline, until it owns the entire company.
With the transaction having closed, ITA Airways will now fully become a Lufthansa Group airline, will join Star Alliance and the Star Alliance transatlantic joint venture, and will even adopt Miles & More as its frequent flyer program.
What do you make of Lufthansa Group now owning a stake in ITA Airways?
What makes this seem a little weird to me is that the Italian economy is collapsing way slower than the German economy is. Maybe this is a move of desperation ?
"Well, today is a huge day for European aviation. Lufthansa’s investment in ITA Airways has been completed, so ITA Airways is now officially a Lufthansa Group carrier!"
Ben says that like this is something to celebrate, but anyone who lives in Europe knows that it's terrible news when the LH Death Star swallows up any airline that serves your region.
They will probably match the very useful Volare Premium status (Sky Team Elite Plus)...
"Well, today is a huge day for European aviation. Lufthansa’s investment in ITA Airways has been completed, so ITA Airways is now officially a Lufthansa Group carrier!"
Ben says that like this is something to celebrate, but anyone who lives in Europe knows that it's terrible news when the LH Death Star swallows up any airline that serves your region.
They will probably match the very useful Volare Premium status (Sky Team Elite Plus) to the useless FTL one.
And how long before Spohr, out of sheer spite, replaces the beautiful Azurri livery with some awful Germanic beige/grey/brown combo. Everything about Lufthansa as an airline is designed to suck all the joy out of flying and squeeze pax till the pips squeak.
I don't think the news is that bad, there was no guarantee that AZ was going to be sustainable in its current form. If anything, it adds more capacity to LH and you'll be able to mix their flights with those of the rest of the group to benefit from times and/or fares that work for you.
The biggest airline in Italy is Ryanair, so I am not horribly worried about the effect on fares.
The privatisation of TAP is where the real risk to competition lies.
I’m not sure if the deal has been fully closed. There is an article on Aerotelgraph (in German) that the EU has imposed two more conditions, one reinstating the feeder contract with Condor and second to review the existing JV with UA/AC. I also miss a clear confirmation by both LH or the Italian government on closing the deal ….
So maybe the last word hasn’t been spoken yet ….
Maybe I missed this but I’m a little surprised to not see one key question addressed: will there be ITA codeshare with United?
Of course there is extensive codeshare with United and Lufthansa Group both selling on to the metal of partners via Lufthansa, Swiss, and Brussels….I think maybe not on Austrian.
Looks like I will have to find another way to keep my Sky Team Elite Plus status, but now I have a reason to use the Copa “trick” to retain the Miles and More / Star Alliance Gold status. Fun times…
What would happen to me as I am Senator (on Lufthansa) and Executive in the Vollare program. Will I get some kind of a status extension once the programs are merged?
ITA is a more premium carrier than Lufthansa. I fear they will strip that away over time.
No worries, according to ORD and E39, ITA will become the greatest it ever was.
The revolution will begin with ITA also adopting the Allegris fiasco.
Expect some A330neos without business class seats in future.
Mason is 100% correct, it’s a new era for ITA now, starting with the delightful abandonment of skyteam: the worst alliance in the world
I would not be too surprised to see LH sabotage ITA'S long haul business, and make out of it a feeder carrier for their own long-haul. Or, if they are mischievous enough, they could put ITA metal and crews to operate long-haul LH flights out of German airports, to arbitrage for lower cost structure and for possible aircraft swaps. Their A340S are gas guzzlers...
I wonder how much down the "pecking order" they'll put ITA under the LH Group.
LH and LX will definitely the top 2 with newest fleet, then IMO would place Austrian then potentially ITA then Brussels.
Alitalia never "belonged to skyteam."
That’s true. AZ/IT contributed very little hence left out of the North Atlantic joint venture. Not sure why they bothered after KLM’s investment years ago that lost millions.
As far as customer experience is concerned (on the ground and in the air), everything Lufthansa touches turns to $h1t, unless you're flying first class. But even at that rarefied level it still compares poorly to all other first class products currently out there.
Except BA probably .
I wish they would get on with it - just feels incredibly dragged out and slow. It be useful for us to get Star Alliance status too this year given some flights we have planned later in the year with some carriers belonging to them.
I think a key factor is going to harmonising the ITA fleet with that of other Lufthansa group carriers in order to be able to operate ITA long haul aircraft for other airlines in the group during the off season in Italy. So with that I wouldn't be surprised if we saw Lufthansa do away with the blue livery and replace the airlines long haul business class with a version of Allegris
That would be a tragedy! The ITA 330 and 350 - 900 interiors are lovely and much nicer than Allegris. I think they'll leave them as they are. However I'd love to see the refund bun-fight if LH changes out an Allegris airframe (with the crazy price tap-dance for seats) with an ITA airframe at the last minute :)
another L for SkyTeam :(
Yep, sky team continues to be the absolute worst of the three alliances
I mean are we shocked tho? They stay vanilla like Delta
@Ben - Any idea what this means for my ITA Volare Executive status, which I got through the status match you posted about several months ago? Am I going to have *A Gold?
An earlier commenter asked the exact same question and Ben answered. Look below :)
Is there a timeline for when ITA will leave SkyTeam and join StarAlliance?
JFKs new Terminal 6 will be full house with the addition of ITA which was a pretty much a given.
Just to keep everyone in the know on who'll be utilizing the new terminal:
-Lufthansa Group (Austrian, Brussels, ITA, Swiss)
-Condor
-CX
-ANA
-Norse
-Aer Lingus
-Air Canada
Its a shame UA couldn't get gates there.
UA could get gates anywhere at JFK. The issue was slots for United and United wasn't willing to pay to regain JFK slots that United sold. Any slot is for sale with a price.
The ITA purchase allows Lufthansa Group to slice Europe right down the middle with Brussels, Swiss, Austrian, & Luft under one umbrella. Each have strong hub(s) with corresponding long distance service which complement the Luft Group.
The bigger question is can Lufthansa control a very temperamental Italian airline which Etihad failed to do in the 2010's. If so, gives leverage against IAG (SpeedBird & Iberia) and KLM-Air France. Looks like Europe has mimicked the...
The ITA purchase allows Lufthansa Group to slice Europe right down the middle with Brussels, Swiss, Austrian, & Luft under one umbrella. Each have strong hub(s) with corresponding long distance service which complement the Luft Group.
The bigger question is can Lufthansa control a very temperamental Italian airline which Etihad failed to do in the 2010's. If so, gives leverage against IAG (SpeedBird & Iberia) and KLM-Air France. Looks like Europe has mimicked the North American model of the Big Three with competing LCC and ULCC carriers nipping at their heels.
Nipping at heels is an odd way to categorise Ryanair, the continent's largest short haul carrier.
RIP competition...
Now, please ORD and E39, explain how would ITA turn into the best airline in the Europe as Lufthansa Group buys them and most importantly joins Star Alliance.
Call-outs are lame.
Not as lame as you desperately trying to cancel me whenever I comment something.
Nice try though.
Better luck next time.
If it's Star, I'll go far. If it's Sky, I'll probably die. Grow a pair and man up.
Cool, my first mention.
I mean, at least ITA no longer has to suffer in Skyteam. Gracious of LH to put them out of misery
While I appreciate the comedic value and truth to the statement about Italian labor relations, labor relations in Germany are no walk in the park! Get called into a works council meeting and you may wish you were in Italy...
Finally!
first, DL and UA are comparable in size to the US; they have flip-flopped back in forth in size. I believe DL will retake the lead w/ schedule adds this summer.
AZ has not been a part of the AF/DLKL JV since when VS was added. AZ is still not a part of the Star JV so UA and AZ legally remain competitors.
For LH Group, they have more hubs to/from most countries than...
first, DL and UA are comparable in size to the US; they have flip-flopped back in forth in size. I believe DL will retake the lead w/ schedule adds this summer.
AZ has not been a part of the AF/DLKL JV since when VS was added. AZ is still not a part of the Star JV so UA and AZ legally remain competitors.
For LH Group, they have more hubs to/from most countries than AF/KL Group so the battle is really about LH Group's domination extending beyond Central Europe and to southern Europe where AF is generally stronger.
and this deal is just part of a reshaping of alliances as well as consolidation in the European airline industry which is decades behind the US. Let's all check back in about 5 years and see where each of the big 3 Euro groups and their alliances - with US partners are - but I suspect there will be alot of "back and forth" in who gains what
How do you define 'Southern Europe'? Lufthansa already owns Air Dolomiti and, together with OS, flies to a bunch of places in the region (e.g. TSR, SKG, AOI, SKP, VAR, SCQ) with no AFKL presence (perhaps some Transavia seasonal service or a TAROM codeshare if you're lucky).
total market share
I remember when AF/KL was in the lead for this transaction, you said that AZ was the magical key that would open up Europe to DL. Not feeling the same way about this for UA, are you?
Hopefully the Air Dolomiti brand is killed ASAP and the operations are folded into ITA as it goes into Star Alliance.
Speaking of which, does anyone know what's happening with the integration of Lufthansa City Airlines into the alliance? It's now quite common to be offered a LH ticket with LH codes on routes that had been LH operated until very recently and 0/4 flights eligible for *G benefits.
Will ITA Volare Executive match to HON?
@ Reyyan — I would expect Senator.
ITA has been handing out Volare Executive like candy. So, it’s going to be a lot of new Senators.
Additionally, half of Scandinavia are also senators given the status match from SK
I always hear the comments about Italy's inferior geography, and I'm unconvinced that it's any worse than Madrid or Helsinki which have huge connecting markets. In fact, if you're flying to the Middle East and North and sub saharan Africa, Italy's geography is great. Flight times to South America are comparable to any other European City, maybe a bit less. It's the work culture and government interference in Italy that is the biggest challenge for...
I always hear the comments about Italy's inferior geography, and I'm unconvinced that it's any worse than Madrid or Helsinki which have huge connecting markets. In fact, if you're flying to the Middle East and North and sub saharan Africa, Italy's geography is great. Flight times to South America are comparable to any other European City, maybe a bit less. It's the work culture and government interference in Italy that is the biggest challenge for an airline to make a profit, and from what I can see, both of these are improving.
Plus FCO in particular is less likely than Central European hubs to experience severe weather.
It would be interesting to see whether they're planning any route optimisation between AZ and OS, which is currently serving lots of places in the Balkans.
When considering geography for airlines, make sure you are looking at the world as a sphere because airlines fly great circle routings. More important when there isn't a blockade on Russian airspace.
Seems a shame to immediately can Fabio Lazzerini, considering he's overseen the impressive turnaround and what is reportedly an excellent business class experience.
Fingers crossed we don't see LH homogenization come to ITA where they just slap their own colors on LH's business class.
Mamá mía!