After months of private negotiations, including extensions, ups and downs, the negotiation between the Minister of Economy and Finance and Lufthansa for Ita Airways is about to cross the finish line. The signing of the agreement, which will allow the German airline giant to hold 40% of the Italian company, is expected to be announced in the coming hours. It’s likely to arrive tomorrow, according to sources consulted. According to the same sources, the operation will begin with a transitional period envisaging a capital increase allocated to Lufthansa. The investment can exceed 300 million. Operational management should be in the hands of the Germans. The agreement will then need to be reviewed by European Antitrust and it will be possible to proceed with the closing after passing the exam. Subsequently, Lufthansa is expected to retain the majority of Ita, which for all intents and purposes will become “German”.
From Alitalia to Ita, a painful story
Thus ends the agonizing story of the Italian national airline, which was born from the ashes of Alitalia and is now about to pass into the ownership of Lufthansa. Ita Airways was born at the end of Alitalia’s extraordinary administration, when the European Commission requested a clear discontinuity in order to authorize the Italian government to establish a new public company for air transport. It is almost a forced decision after the European Commission’s statements, which defined the 900 million euro bridge loan given by the government in 2017 as “illegal”. On 15 October 2021 the first Ita flight took off, from Milan- Linate to Bari- Clearly it should have been the first of many. Instead, things didn’t go right from the start. A painful start with a fleet halved compared to Alitalia led to 2021 with a turnover of 86 million euros and a net loss of 149 million euros.
Privatization decision
After the first months of activity, which is far from exciting, the Ministry of Economy and Finance decides to prefer the partial privatization of Ita in the case of clearly advantageous offers. On January 24, 2022, statements of interest were announced by MSC Group and Lufthansa, a “race” to which the Air France-KLM group was later added. The same year, the bid deadline expired on May 23, and on August 31, Mef announced that it had accepted the offer submitted by its investment company Certares, which will buy 50% of the company, and AirFrance-Klm. For 350 million euros. However, in the usual time required to finalize the details, the Ministry failed to find a deal with Certares and effectively blew up the partnership agreement. In December 2022, a new Dpcm was released with big news: The Treasury’s restriction on holding only a minority stake in the early stages of privatization would be lifted.
Negotiation with Lufthansa
In view of the new circumstances, Lufthansa has submitted a new offer to buy 40% of Ita’s shares through a capital increase. A second startup, this time not facing competition from the AirFrance-KLM group, was immediately aware of the new possibility and immediately announced that it would not submit any offers. Private negotiation begins with the German airline in January 2023, and now, almost six months later, the moment of signing has arrived. Lufthansa will take over 40% of the company in the next two years with the goal of achieving full ownership, even if the Italian state has the option to retain a minority stake. Relationships between Lufthansa and Mef, which will continue to own 60% of the company for now, will be governed by a shareholders’ agreement, an agreement governing the activities of two subjects within the same company. More details will only be given after the official announcement.
Source: Today IT
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
