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 October 2021, several parties have expressed interested in acquiring the airline.
In the spring of 2023, we learned how Lufthansa Group intended to buy a major stake in ITA Airways. However, for over a year now, the deal has been awaiting regulatory approval, and there have been questions about whether or not the investment would get the green light.
Well, there’s now an official update — the European Union has approved Lufthansa Group’s takeover of ITA Airways, so this is really happening!
In this post:
EU approves Lufthansa’s ITA Airways investment
Lufthansa Group is acquiring a 41% stake in ITA Airways for a capital contribution of €325 million, and the transaction should close in the fourth quarter of 2024. This agreement also gives Lufthansa 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.
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. 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 describes this takeover:
“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 will become a Lufthansa Group airline
So, what’s Lufthansa’s plan for ITA Airways? Upon closing of the transaction in the fourth quarter of 2024, ITA Airways is expected to immediately 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.
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 is 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 has joined the SkyTeam alliance as well. 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. 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 gotten the green light to acquire a 41% stake in Italy’s ITA Airways from the Italian government. The plan is for Lufthansa to eventually take full control of the airline.
The deal should be complete in the fourth quarter of 2024, at which point ITA Airways will 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 investing in ITA Airways?
Question: If I book an ITA award flight through KLM flying blue for 2025 will it be honored?
I'm pretty sure that if you're able to make a confirmed reservation then it will be honored.
I’m not sure I’m all that fond of this. With SAS gone this means almost all of the Star Alliance European airlines will be clustered in the center of Europe with not enough coverage on the sides. I think it would’ve made a lot more sense for Aer Lingus to join Star Alliance/Lufthansa Group than ITA.
The western side is covered through TAP, the southern side through ITA and Aegean, with the northern and eastern sides covered with the LH group, LOT, and Croatian.
Star covers Europe better than any other alliance.
I don't think this will affect Air Dolomiti. They are a regional that is basically integrated into the Lufthansa network. Kind of like Horizon is for Alaska, only Air Dolomiti focuses on serving the two LH hubs from Italian regional markets. ITA will operate more similarly to OS or LX.
Fun fact: SAS was the Star Alliance’s only airline with a non-white (in this case, silver) livery, so with that moving to SkyTeam, every single Star Alliance member will have only Eurowhite liveries — until ITA with its bold blue livery enters the scene! SkyTeam has no shortage of blue liveries even after ITA’s departure, between KLM, Aerolíneas Argentinas, Korean Air and Vietnam Airlines.
Funny, I never noticed that. For the 90 flights I have taken with SK their aircraft always seemed to be white for me. Maybe not Eurowhite, but certainly white. Didn't know that it was silver.
Sounds like ITA might be a good thing, compared of what entire LHG has to offer so far in terms of there Business Claas product within Europe?
Sad thing is, . . . another Airline in the EU that Spohr has to say something, but is SO FAR BEHIND with his mind and his way of being competitive these days, that it's unbelievable to me that ITA was not a 100% part of KL/AF...
Sounds like ITA might be a good thing, compared of what entire LHG has to offer so far in terms of there Business Claas product within Europe?
Sad thing is, . . . another Airline in the EU that Spohr has to say something, but is SO FAR BEHIND with his mind and his way of being competitive these days, that it's unbelievable to me that ITA was not a 100% part of KL/AF trough the investment of DL as they were bidding for ITA too?
So in my mind, THIS ENTIRE "deal" was long ago all set up already, knowing how (dirty) Spohr's hands are and anything he touches!
About corrupt countries (EU is trying to tell Ukraine to work on there corrupt government before they would even be considered, becoming part of the EU) while German Government is one of the most corrupt government in the world, when it comes to traffic, no matter if on the ground or in the air!
Spohr's way or no way!
Has always been that way, together with his "buddies" in the German government!
Look back:
airberlin traffic rights and JV with Etihad, CONDOR trying to pull the plug on pro rates for LH feeder service to/from FRA, Discover Airlines (Disaster, as i like to call that Holiday Airline of LH) ALL there employees are still (3 years after the start) working WITHOUT any collective agreement, City Airlines . . . . trying to get rid of long lasting LH City Line, same routes, same aircraft, but little to lowest income contracts with there flight staff, . . . i could cont. for hours just to point out HOW CORRUPT the entire league around Spohr and his buddies in the German Government is.
ANYBODY who's supporting this Lufthansa Group, should really know, what 's up with that Airline, before spending 1 Cent on any of there flights!
I'm not shy to say, . . . .
THIS ITA deal was loooooong in the making and the dice have been rolled a long time ago already . . . but a BIG drama game on EU agreements have been spun. To give Lufthansa time and make it look REAL in public!
LHG is one of the aviation companies that should always be avoided, if possible, . . . . simply because of there dictatorship!
.... as Lucky wrote here already:
Wait and see, what will happen to EN, luckily they have enough bases, away from FCO, MIL to stand on good ground, to compete with ITA, even if most of there planes are based in MUC!
While Air Dolomiti was a feeder from nothern Italy into MUC and to a lesser extent FRA for a long time, it seems to be LH's goto carrier for any kind of short haul fitting the Embraers that it can use to bust it's own union. So I don't think the future will change much as ITA will mostly feed FCO and maybe run the focus city in LIN, but not feed LH hubs from all over.
So: the Star Alliance giveth (SAS), and the Star Alliance taketh (ITA). And the Star Alliance giveth once more in a couple of years’ time, when Asiana is folded into Korean. But what about Air Europa joining IAG and leaving SkyTeam?
and the future TAP is "up in the air"
and, as Cranky Flier wrote yesterday, Abra is building a pan S. American airline group that could rival Latam in coverage which would leave two large airline groups in S. America - and Delta has one of them.
Alliances are always in flux but there seems to be alot in change in the near future and there will be no more downside for AA and UA than for DL.
As Klaus_S already wrote the KPIs of LH group management are the number IATA codes and subsidiaries. So TAP will definitely end up being the next LH group airline.
Hmm my concern with this is that ITA’s soft product is going to be worse. I hope that ITA can retain its Italian flair, as Austrian Airlines maintains its soft product a cut above LH J and LX J.
ITA certainly has some of the best food in Europe, but I'm not sure how their soft product is otherwise differentiated though. Service in EU all around is quite average.
best food in Europe as "nuts" and "water" in Business (Premium Class) intra-EU?
If IHG doesn’t get approval for the air europa takeover hello lawsuit
Good luck to them. They will need it.
ITA has a very good on board product but the bones of AZ's labor issues remain.
Airfreight????
I wonder which SkyTeam airlines will match ITA status.
Probably none, as ITA status was ridiculously easy to both obtain and maintain.
brutal and, for a lot of insiders, unexpected blow to SkyTeam.
withering away in front of us
you do realize that Delta specifically EXCLUDED AZ from the joint venture when VS was added?
And Star dissed SK from the beginning of the Star JV.
We realize you United folks have small "apparatus" and make it for it with big talk but the AF/DL/KL/VS JV is still the largest JV in the world even without AZ and will grow with the addition of SK which is far more valuable as a connecting...
you do realize that Delta specifically EXCLUDED AZ from the joint venture when VS was added?
And Star dissed SK from the beginning of the Star JV.
We realize you United folks have small "apparatus" and make it for it with big talk but the AF/DL/KL/VS JV is still the largest JV in the world even without AZ and will grow with the addition of SK which is far more valuable as a connecting hub.
and Delta managed to make twice as much money as United flying the Atlantic in 2023.
The sooner you come to grips with the reality that United is big talk and small delivery, the sooner you can get the help you need.
sorry to have hurt your feelings, friend, no offense intended. just trying to provide an industry perspective
DL and AF/KL specifically excluded AZ from the JV years ago.
AF and DL considered bidding for AZ and walked away - perhaps because it gave them time to view AZ's books and partly to drive up the price that LH Group ended up paying.
AZ was demoted to second tier mode in SkyTeam long before LH showed up; you don't seem to get that Cranky accurately has called AZ - under whatever name...
DL and AF/KL specifically excluded AZ from the JV years ago.
AF and DL considered bidding for AZ and walked away - perhaps because it gave them time to view AZ's books and partly to drive up the price that LH Group ended up paying.
AZ was demoted to second tier mode in SkyTeam long before LH showed up; you don't seem to get that Cranky accurately has called AZ - under whatever name they use - as the world's worst airline. SkyTeam is losing nothing.
Nothing about AZ's departure from SkyTeam is a surprise or unexpected.
You aren't providing industry perspective. Your gloating and doing it in complete ignorance of facts.
SK just went through a restructuring that will allow it to compete and make money. AZ has restructured and still won't be able to compete.
None of which changes that the Star transatlantic JV is smaller than the Skyteam JV just as the Star transpacific JV is smaller than the Delta/Korean JV.
and Delta makes twice as much money per seat mile than United across both the Atlantic and Pacific.
This has to be a parody comment.
- The assertion that AZ is 'the worst airline in the world' is plainly ridiculous, there's no need to comment further on it.
- The claim that DL considered bidding for AZ is stretching the truth, as the Italian state hadn't been looking for minority shareholders and EU legislation would prevent controlling interests being based in third countries. Of course it might have been possible for...
This has to be a parody comment.
- The assertion that AZ is 'the worst airline in the world' is plainly ridiculous, there's no need to comment further on it.
- The claim that DL considered bidding for AZ is stretching the truth, as the Italian state hadn't been looking for minority shareholders and EU legislation would prevent controlling interests being based in third countries. Of course it might have been possible for DL to have some minor equity holding in AZ, but they wouldn't be driving the deal, just as they didn't have much involvement in the SK one.
- The claim that AZ were a second tier alliance member is actually correct, but the reason for that is that Alitalia left the alliance and ITA joined as a new member which never made a serious attempt to integrate fully. This has nothing to do with any kind of 'demotion', Alitalia were always working closely with their alliance partners and treated Skyteam frequent flyers very well. What next, will you be saying that AR has somehow been 'demoted' in Skyteam because DL is working with LATAM who aren't even a member? Try using your Korean Air status to get benefits on LATAM and let us know how you get on.
some of us keep track of developments in the industry.
Airline Weekly
Edward Russell
August 31st, 2022 at 11:50 AM EDT
"The biggest prize in the latest round of European airline consolidation, Italy’s ITA Airways, is likely to be won by Air France-KLM and Delta Air Lines.
"The Italian Ministry of Economy and Finance said Wednesday that it had entered “exclusive negotiations” with private equity firm Certares, as well as Air France-KLM and...
some of us keep track of developments in the industry.
Airline Weekly
Edward Russell
August 31st, 2022 at 11:50 AM EDT
"The biggest prize in the latest round of European airline consolidation, Italy’s ITA Airways, is likely to be won by Air France-KLM and Delta Air Lines.
"The Italian Ministry of Economy and Finance said Wednesday that it had entered “exclusive negotiations” with private equity firm Certares, as well as Air France-KLM and Delta, in the privatization of ITA. ITA replaced ailing state-owned carrier Alitalia in October 2021. The ministry said the Certares-led consortium’s offer was “more in line” with the objectives of the sale than a competing bid from the Lufthansa Group and shipping giant MSC. Certares would provide the initial equity with Air France-KLM and Delta as commercial partners."
Obviously, AF/KL/DL did not like what it saw in the books and walked away which provided an opening for LH.
Again, those of you that are hellbent on trashing me should do a MUCH BETTER job of keeping up w/ the industry
Tim, sorry to say but you are horribly uninformed, and please stop getting your info from surface level reporting and then acting like youre the best informed person in the world. AZ was excluded from the JV because it kept asking for more rights for flights to the US and the JV partners denied them since they wanted AZ to feed their flights. The plain arrogance of Air France is the sole reason that happened....
Tim, sorry to say but you are horribly uninformed, and please stop getting your info from surface level reporting and then acting like youre the best informed person in the world. AZ was excluded from the JV because it kept asking for more rights for flights to the US and the JV partners denied them since they wanted AZ to feed their flights. The plain arrogance of Air France is the sole reason that happened. After that it became a second class airline within Skyteam and the rest is history.
As for the AF/DL/Certares bid- they never got to look at the books and neither did LHG until very late in the process because ITA guarded them like an endangered species. This is because they knew AF were a flaky partner at best and because AF at the time still didnt pay off its covid loans and would likely get ITA's route profitability info and chicken out of the deal.
This deal failed because LHG offered the Italian government a clear plan of action and development of the airline, whereas AF clearly did not. Their 5 month exclusivity period for negotiations expired and they couldnt present anything to the government, and the government rightfully blew them off seeing what their plans were - i.e. more of the same stuff that happened with Alitalia
@Tim Dunn, the fact that you have read something doesn't mean that you have actually understood it. The quote specifically states that the proposal had been for a deal driven by a private equity firm of which AFKL and DL were merely 'partners'. Certares may or may not have liked ITA's accounts, but it was their money being (or eventually not being!) invested, not AFKL's and definitely not that of a non-EU airline.
Yeah, Cranky Flier loved to call Alitalia the worst airline in the world and this label was passed on to ITA in the wake of Alitalia's demise. Is it true? No, of course not. But, because of the Italian penchant for mismanaging state-run entities, the stereotype sticks.
Tim Dunn is a parody of Tim Dunn.
Absolutely terrible, further expanding the territory on which LHG has de facto monopoly. EC is very good with their anti-monpoly policies until member state's interests are involved - then they refocus on creating extremely ridiculous arguments why the merger is actually ok despite being exactly what the law is supposed to prevent. But hey, EC is member states' servant by design...
The most bizarre part is that the Italian public actually sees this as a...
Absolutely terrible, further expanding the territory on which LHG has de facto monopoly. EC is very good with their anti-monpoly policies until member state's interests are involved - then they refocus on creating extremely ridiculous arguments why the merger is actually ok despite being exactly what the law is supposed to prevent. But hey, EC is member states' servant by design...
The most bizarre part is that the Italian public actually sees this as a win, even though the only thing it will achieve is massive price hike and regress in quality on Italian aviation market. The wake-up call will come very soon.
They are probably pleased with the fact that they will no longer have to subsidise an Alitalia zombie with their taxes. Surely that must be a positive development.
They never "had to" subsidize it. They should've just closed the airline. It's not like no other airline is interested in flying to Italy.
I quite disagree with you.
A year long negotiation with the EU does not sound like an easy ride. Also this is much better for competition than letting a standalone airline file for bankruptcy. That wouldn't help competition either.
LH Group now cuts Europe right down the middle with Brussels, Lufthansa, Swiss, Austrian, and now ITA. To get the max out of the latest acquisition, all the back office functions (scheduling, purchasing, finance, sales, etc) need to be rolled into the LH Group for economy of scale. Also, this gives LH enhanced leverage in the Star Alliance.
Well good luck to the Germans in their dealing with Italian Unions. If past behaviour is any predictor of future behaviour, they're gonna need it. On the other hand, perhaps the employees will have been sufficiently spooked by the death of the Alitalia brand and the very real prospect that the airline mightn't rise from the ashes at all. Time will tell.
Looking at Lufthansa, ground staff at airports (security...), or Deutsche Bahn unions in Germany have been quite strong and travel disrupted quite often those last years.
German unions are no party.
ITA extended my status match for no reason, so I hope Volare ends up in M&M before year end.
There is no guarantee that M&M will simply copy/paste your ITA status. More likely, they will do it based on your flight history in the past 12 months, with some kind of status challenge to help you along the way.
I doubt this includes US approval of ITA entering the Atlantic JV
Italy has a lot of business traffic.
Italian GDP 2.6 trillion USD
Per capita GDP $44,000
Population 61,000,00
German GDP $4.5 trillion
Per capita $54,000
Population 84,000,000
Hence more than an investment looking for customers exclaiming, “if it’s Tuesday, that must be the Leaning Tower of Parmesan!”
Nonono, it's all about DL and UA flying people from the Midwest to Cinque Terre during spring break!!!!
Italy is actually quite poor judging off numbers.
Those numbers don't take into account the high taxes either.
But, will the EU approve ITA City and ITA Express and ITA Something Or Other, which are bound to be created?
“I’m curious what this means for Air Dolomiti, which is another Italian airline that Lufthansa already owns”
Looking at Lufthansa's Annual Report 2023, it is clear to see that the variable salary component of the Lufthansa Group Executive Board is derived from two main annual targets:
1) Number of additional subsidiary airlines per year (KPI: New IATA codes per year; target value for 100% goal achievement in 2024: 3 new IATA codes)
2)...
“I’m curious what this means for Air Dolomiti, which is another Italian airline that Lufthansa already owns”
Looking at Lufthansa's Annual Report 2023, it is clear to see that the variable salary component of the Lufthansa Group Executive Board is derived from two main annual targets:
1) Number of additional subsidiary airlines per year (KPI: New IATA codes per year; target value for 100% goal achievement in 2024: 3 new IATA codes)
2) Quantity of tomato juice saved (KPI: Cups per quarter; target value for 100% goal achievement in 2024: 17,000 cups)
Target (2) has already been achieved and the Management Board can look forward to a one-off special payment.
Regarding (1) and to answer your question: Air Dolomiti will stay and set up a subsidiary for the Czech market: Air Arber is due to start in September.
Furthermore, ITA will start its subsidiary Alitalia in Q04/24 as a regional airline to connect LIN with MXP and LIN with FCO. In case you are wondering, they're already applying for the new slots.
LIN and MXP are both in Milan. MXP to FCO is unlikely though as ITA has stopped all flights from MXP
@Eol
The comment you have replied to was comedy.
I'm pretty sure Klaus_S knew exactly what he was writing about.
@Klaus I really hope that if they intend to fly LIN-MXP, they also give LIN-BGY and FCO-CIA a shot ;)
SAS for ITA seems like a good trade for *A. SkyTeam's victory turned out to be short-lived indeed.
Depends on how you view it. From the perspective of AFKL, they will lose some feed but ITA is already a competitor on routes to the Americas and bits of Africa.
From the perspective of frequent flyers, SAS adds a couple of really decent hub options for those who don't like AMS and/or CDG. Unless you are going to smaller cities in Italy, SK offers more flights to more destinations. ITA don't have any...
Depends on how you view it. From the perspective of AFKL, they will lose some feed but ITA is already a competitor on routes to the Americas and bits of Africa.
From the perspective of frequent flyers, SAS adds a couple of really decent hub options for those who don't like AMS and/or CDG. Unless you are going to smaller cities in Italy, SK offers more flights to more destinations. ITA don't have any flights to major European destinations such as DUS and MAN, miss out important countries such as Czechia, Poland, and Portugal, and have huge gaps even around the Mediterranean (e.g. nothing to AGP, VLC, LYS, MRS, SKG, or anywhere in Croatia or Slovenia).
On the other hand, from the perspective of Star Alliance frequent flyers, TK, MS, and A3 have the Near East covered really well, while the Lufthansa Group already has 3 major hubs in Central Europe, less than 45 minutes from Milan. There's something to be gained by combining AZ flights with those of the other airlines within the group, but is that really so significant?
I’m sure United is much happier to welcome ITA and not at all sad about SAS.
I think United needs to add EWR to Palermo and Los Angeles to Rome next. :)
Delta can still focus on giving their international flying to partner airlines lol
Yes… definitely EWR to Palermo!
SK was never part of the JV so it's not really compatible. However, Italy is a low-yield market compared to Scandinavia, one of the richest regions in the world. There's very limited potential of ITA in JV besides bringing in some holiday makers. It doesn't even have a strategic position for feeders from other afluent regions - or any regions at all, because the only part of Europe from which it somehow makes sense to...
SK was never part of the JV so it's not really compatible. However, Italy is a low-yield market compared to Scandinavia, one of the richest regions in the world. There's very limited potential of ITA in JV besides bringing in some holiday makers. It doesn't even have a strategic position for feeders from other afluent regions - or any regions at all, because the only part of Europe from which it somehow makes sense to connect in Italy on the way to the US is Balkans which is already covered well with the existing LHG network.
There's very little strategic benefit in this acquisition, besides reducing competition for LHG.
I hope my ITA Sky Team Elite Plus status will get matched to SEN
Probably with strings attached, such as a status challenge or similar.
So even less competition to LH-group in Europe .
An inevitable stand-alone bankruptcy of ITA would have led to even less competition than the integration into LH group.
In my view one has to take into account that there will be further consolidation of the airline market - not just in Europe but all over the world. In Europe we will have three big network carriers being AFKL, IAG and LH group and probably also three (maybe only two) LCCs being FR, W6, U2....
An inevitable stand-alone bankruptcy of ITA would have led to even less competition than the integration into LH group.
In my view one has to take into account that there will be further consolidation of the airline market - not just in Europe but all over the world. In Europe we will have three big network carriers being AFKL, IAG and LH group and probably also three (maybe only two) LCCs being FR, W6, U2. Also in North America you have three major network carriers plus some LCCs.
Other than those dogmatic anti competition civil servants I believe that this consolidation is a healthy development rather than something which is necessarily limiting competition and increasing prices. What will lead to decreased competition and increased prices are airlines which go bankrupt because they couldn't survive on their own. Limiting those mergers (like NK and B6) may be very short-lived competition gains. In the long run they are not help competition but rather stifle it.
Another Spohrhansa. Mode of the same. High prices, low quality. Who needs that?
agree 100% on ANYTHING this Spohr Guy is in the bush with, this Guy is BAD for any industry, NOTHING BUT BAD!
The real question is what the EU means by providing greater competition between the US and Italy at FCO.
DL has been the single largest airline between the US and Italy for a number of years but UA has gained and whoever AZ aligns with will have an advantage. If the EU requires Star to not fully cooperate on all US-FCO flights or requires slot divestitures at FCO, this could be interesting to watch....
The real question is what the EU means by providing greater competition between the US and Italy at FCO.
DL has been the single largest airline between the US and Italy for a number of years but UA has gained and whoever AZ aligns with will have an advantage. If the EU requires Star to not fully cooperate on all US-FCO flights or requires slot divestitures at FCO, this could be interesting to watch. While AA has tried to stay in the Italy battle, they underperform DL and UA on average fares by a fairly significant margin.
But even within the EU, the divestiture of slots at LIN will further erode ITA's size and prospects for profitability. Ryanair wanted this merger to go through so it could get more slots and they will probably win at least some of what is divested. There is no way that ITA will ever regain a decent share of its home market so LH Group is just paying for getting a minority share of a large local market that is highly competitive and which competing alliances still have shares that will be just about as large.
Your boys lost, Timmeh, so it's no surprise to see you whining. alITAlia is going to my preferred alliance now, and gives me another option next year when I'm planning a Chicago to Rome adventure depending on partner award space. LieTeam has become ever so slightly more unfashionable today.
You speak like Donald Trump :/
you go after Alitalia, UA employee, but they don't exist any more.
Chase the miles and awards.
Delta has and to this day continues to carry more REVENUE between the US and Italy.
And, at best, this is a draw with SAS moving to SkyTeam as part of the JV. ITA wasn't part of the AF/DL/KL/VS JV.
@ Tim I think ORD meant to say that Alitalia and ITA are the same hence it was written as alITAlia. The three letters ITA literally is in the former spelling of Alitalia.
While I disagree with the language and how ORD said it, it's pretty clear barring something way out of left field this is a big victory for United and *A given the initial demand of ITA not being allowed to join the transatlantic venture that is now gone. *A basically traded a SaS that wasn't part of its transatlantic venture for ITA.
While SkyTeam will gain in the Nordics, *A will strengthen their foothold in...
While I disagree with the language and how ORD said it, it's pretty clear barring something way out of left field this is a big victory for United and *A given the initial demand of ITA not being allowed to join the transatlantic venture that is now gone. *A basically traded a SaS that wasn't part of its transatlantic venture for ITA.
While SkyTeam will gain in the Nordics, *A will strengthen their foothold in Italy, a bigger business and exponentially bigger tourist market. Given United at times had already served more niche destinations (e.g., Palermo) than Delta or United prior to COVID and has a ton of incoming planes, it's likely we will see the addition of those tier 2 Italian destinations that with the Lufthansa and ITA feed likely only United will be able to service profitably.
It is very likely we will see United lose share in the Nordics but pass Delta in Italy, a trade I'm sure they'll very happily take.
thank you, Jeremy, for your civil approach. We need more people like you to participate in these discussions. However:
1. if it were just about the local market, then you might be right. But Italy is simply a far less valuable place for a hub than Scandinavia. Italy's own policies made it very difficult to hub in Italy anyway because the primary domestic airport for Milan is in a separate airport than the international airport.
thank you, Jeremy, for your civil approach. We need more people like you to participate in these discussions. However:
1. if it were just about the local market, then you might be right. But Italy is simply a far less valuable place for a hub than Scandinavia. Italy's own policies made it very difficult to hub in Italy anyway because the primary domestic airport for Milan is in a separate airport than the international airport.
2. All of those extra destinations that UA serves are with 757s - which incidentally do not have Polaris no matter how much people want to trash DL's 767-300ERs - but the extra capacity does not turn into more profits. UA made HALF of what DL made in 2023 flying the Atlantic even though UA flew more capacity. People HATE me bringing this up but there are clear reasons why UA makes so much less money. The sooner that UA's fans come to grips and discuss the reasons, the more it will become apparent that UA does not have an advantage.
And if you or anyone thinks that profits don't matter, UA and no other for-profit company can continue to offer a comparable level of service - including flights -if it can't make money doing it.
3. and don't forget that the EU said that there has to some mechanism to ensure greater competition. Let's not take anything to the bank until UA and all of its Italian flights are in the JV with AZ - and the same goes for SK and the SkyTeam JV - which hasn't even been applied for.
“ the divestiture of slots at LIN will further erode ITA's size and prospects for profitability. Ryanair wanted this merger to go through so it could get more slots and they will probably win at least some of what is divested. ”
Tim
We know you go ballistic about anything related to delta but at least research first. You can’t say Ryanair wants more Linate slots when they don’t fly there in the first...
“ the divestiture of slots at LIN will further erode ITA's size and prospects for profitability. Ryanair wanted this merger to go through so it could get more slots and they will probably win at least some of what is divested. ”
Tim
We know you go ballistic about anything related to delta but at least research first. You can’t say Ryanair wants more Linate slots when they don’t fly there in the first place. They want “a” linate slot.
Try a little, at least, to look less foolish.
But as usual, you try to push nonsense dl vs aa/UA data you know nothing about
Nobody cares about sas; italy is a much bigger market than what remains of sas
And as a reminder, sas hasn’t even started trying to get clearance (with anyone) to join the JV with af and kl with their large overlap. Calm down, basement boy.
Ryanair WANTS Linate slots, Max.
It will come from what AZ operates right now.
As usual, YOU are the one that can't deal w/ reality.
And Ryanair IS already the largest airline by flights in Italy, Max, but you would like to pretend that isn't reality.
Not tim Dunn trying to change the topic when he’s proven wrong again.
you and your simpletons should truly learn to read before you engage in your incessant attempts to trash other people.
Ryanair is the largest airline in Italy. Many airports are slot-controlled. Ryanair serves Milan via 2 of the 3 airports including MXP.
Ryanair wants more.
Your attempts to deflect from your own usual inaccurate statements are fun
But dumb
Saying Ryanair wants more slots at Linate ignores that they don’t fly there
It has nothing to do with who’s the biggest domestic EU carrier or Atlantic carrier in Italy.
And btw. In case you forgot, sas isn’t really dominating their home markets against the ULCCs either
Stick to what you know: your mom’s basement
People who think that this change will meaningfully reduce competition in the Italian aviation market are completely out of touch. Ryanair operates over a third of the seats flown from/to/within the country, while easyJet, Volotea and Wizzair also have very extensive operations. In that context, I don't think that Lufthansa, or anyone else, is particularly worried about Skyteam in particular or any other traditional airlines.
The Commission is absolutely doing the right thing in...
People who think that this change will meaningfully reduce competition in the Italian aviation market are completely out of touch. Ryanair operates over a third of the seats flown from/to/within the country, while easyJet, Volotea and Wizzair also have very extensive operations. In that context, I don't think that Lufthansa, or anyone else, is particularly worried about Skyteam in particular or any other traditional airlines.
The Commission is absolutely doing the right thing in approving the acquisition which is likely to benefit consumers by creating a sustainable carrier in place of a rather wobbly one. My only reservation is that it may be looked at as some sort of precedent in the decision about the IB/UX tie up, in a market which is very different.
All the carriers you listed are LCCs with point to point flights and relatively obscure frequencies. This is not a direct competition to LHG. If it was, LHG would already be dead. Where LHG makes money is offering more obscure complicated itineraries and high frequencies. If you want to go "somewhere sunny sometime in June", sure, Ryanair will beat LH. If you need to go from Ljubljana to Gdansk on 8 June in the morning,...
All the carriers you listed are LCCs with point to point flights and relatively obscure frequencies. This is not a direct competition to LHG. If it was, LHG would already be dead. Where LHG makes money is offering more obscure complicated itineraries and high frequencies. If you want to go "somewhere sunny sometime in June", sure, Ryanair will beat LH. If you need to go from Ljubljana to Gdansk on 8 June in the morning, you need to fly Lufthansa.
LHG doesn't give a damn about holidaymakers on 40€ Ryanair fares. What they do care about is making sure that people who need to travel to a specific place at a specific time have no choice. They are quite open about this actually, if you read past statements from their management.
The wobbly carrier should've simply been closed down. Let all the Big 3 airlines fill out the gaps in normal compeitive enviroment. That would be far more beneficial than handing everything to Lufty.
I don't disagree with that reading of Lufthansa's strategy, however ITA don't fly to either Slovenia or Poland, or Portugal, or Czechia, or Croatia etc, so they are only relevant competition to Lufthansa when it comes to second- and third-tier Italian destinations. I suppose the acquisition might cause a tiny increase to fares for some itineraries to/from Genoa or Brindisi, but the low-cost competition means that there won't be a huge amount of pricing power.
Who (other than you) says "the wobbly carrier should've simply been closed down"?
Let the market take care of that.
As long as there is someone willing to inject €325m into such a wobbly carrier, let them do that and continue. Much better for the public than closing it down. And if you look at SN, SR(now LX) and OS in what shape they have been when LH took them over then integrating an...
Who (other than you) says "the wobbly carrier should've simply been closed down"?
Let the market take care of that.
As long as there is someone willing to inject €325m into such a wobbly carrier, let them do that and continue. Much better for the public than closing it down. And if you look at SN, SR(now LX) and OS in what shape they have been when LH took them over then integrating an already cleaned up, formerly messy AZ should be an easy task. If Spohr doesn't ruin it and - like he tries do do with the other lines he is responsible for.
Don't underestimate those carriers with "relatively obscure frequencies"; Ryanair has the biggest operation in Europe with WizzAir and EasyJet working to catch up. If you're not in Europe, it's easy to forget about these players but that would be a mistake. Much of the LH Group redundant airline idiocy that we've ridiculed has been at attempted response to pressure from these guys.
As for ITA, for one thing, Italy will always have a "national...
Don't underestimate those carriers with "relatively obscure frequencies"; Ryanair has the biggest operation in Europe with WizzAir and EasyJet working to catch up. If you're not in Europe, it's easy to forget about these players but that would be a mistake. Much of the LH Group redundant airline idiocy that we've ridiculed has been at attempted response to pressure from these guys.
As for ITA, for one thing, Italy will always have a "national airline" because the government seems hell bent on insuring there is one. So they clearly do give a damn. And Gdansk to Ljubjana can also be achieved on LOT (another STAR Alliance carrier). That's a pretty obscure routing in itself. Thanks to rail, the market for airlines is more leisure based for Europeans than our experience in North America anyhow. So, again, best not to dismiss those ULCC's. It's the longer haul flying that LH Group needs to feed into its system. Not Hans traveling from Hamburg to Belgrave on business.
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Not going to lie, the ease with which this acquisition has taken place has been rather surprising... I was expecting greater opposition from the EU/EC, but then again, with Alitalia's precedent, it was probably in most people's best interest to have a more serious company running the airline. Big props so far to those in charge of the acquisition process.
Nonetheless, from Lufthansa Group's standpoint, I just can figure out the extent to which ITA...
Not going to lie, the ease with which this acquisition has taken place has been rather surprising... I was expecting greater opposition from the EU/EC, but then again, with Alitalia's precedent, it was probably in most people's best interest to have a more serious company running the airline. Big props so far to those in charge of the acquisition process.
Nonetheless, from Lufthansa Group's standpoint, I just can figure out the extent to which ITA complements its network... seems like there's overlapping more than anything to me when looking at the bigger picture. Prior to their announcement with MSC (btw are they still onboard?), I genuinely thought that they'd go for TP and try to catch up with IAG and AFKL in the Latin American market (where they are very much lacking in comparison)... but guess I was wrong
EC can't go against a member state and Italy was very invested in lobbying for ITA LHG merger. Germany certainly wasn't against it either. That's too much pressure to handle. EC has stopped much smaller / less problematic mergers in the past, when only private sector was involved.
@Ben Holz
What do you mean with "the ease"?
LH and Italy agreed in May 2023 on the terms. The EU has taken more than a year to approve this with multiple rounds of negotiations about the terms. I wouldn't necessarily call that "ease".
@scio nescio, I would say that this is a significant merge in terms of the size and complexities of both companies. When you look at how long some other mergers in the EU have taken to get regulatory approval in recent years (e.g. IB/BA: 2 years), I would say that it's relatively quick.
Also, IAG announced the acquisition of UX back in Nov 2019 and to this day I believe that they are still...
@scio nescio, I would say that this is a significant merge in terms of the size and complexities of both companies. When you look at how long some other mergers in the EU have taken to get regulatory approval in recent years (e.g. IB/BA: 2 years), I would say that it's relatively quick.
Also, IAG announced the acquisition of UX back in Nov 2019 and to this day I believe that they are still dealing with antitrust objections from the EC. I didn't use this as the initial example because that was right before the pandemic and that led to a "planned" postponement of the merge until Q3/4 of 2021... but still, now they are 2.5 years behind schedule with *finalizing* the merge, yet still don't have full regulatory approval.
I am thrilled this will be approved. I work for UAL and it will be great to have italy part of the star alliance network. I hope this works well for the ITA employees who, I am sure, have seen a roller coaster of work rules and pay matters. I wish all parties good luck.
This may be good for Lufthansa (or may be a financial disaster), but I am surprised EU regulators would approve this based on market share and fairness to competition (and the public).
If it does go through, I hope Lufthansa will standardize & improve ITA ground services, lounges and operations in those notoriously chaotic Italian airports.
in Germany they have a saying . . . so LH won't be able to change much in those points you mentioned!
"Was Haenschen nicht lernt, lernt Hans nimmermehr" (a tree must be bent, while it's growing) . . . . too late for it all!
But then again . . . LH (the entire Group!!!) could learn a lot from ITA newest hard product in terms of there A-321 neo compared to...
in Germany they have a saying . . . so LH won't be able to change much in those points you mentioned!
"Was Haenschen nicht lernt, lernt Hans nimmermehr" (a tree must be bent, while it's growing) . . . . too late for it all!
But then again . . . LH (the entire Group!!!) could learn a lot from ITA newest hard product in terms of there A-321 neo compared to cheap LH, LX, OS middle seat empty and nothing that ANYBODY should ever call Business Class on any medium range aircraft!
ITA 100% in the lead!
Business Seats on the Stelia Opera seats, a whole NEW and so far BEST of ANY EU airline!
So maybe in 10 years time (or more?) low cost LHG airlines might learn from ITA how to do it "right"?!
Welcome to The Fourth Reich, aka European Union.