BRUSSELS – Lufthansa won European Union approval to buy a stake in Italy’s state-owned carrier ITA Airways after last-ditch concessions eased high tensions between Rome and Brussels.
The German airline, already the biggest in Europe by revenue, now adds Italian routes to its network, guaranteeing the future of the loss-making Italian airline, the successor to failed Italian flagship airline Alitalia.
EU competition chief Margrethe Vestager said a package of concessions offered by the companies “fully addresses our competition concerns by ensuring that a sufficient level of competitive pressure remains on all relevant routes,” according to an emailed statement.
Italian officials pushed hard for the EU to clear the deal. Deputy Prime Minister Matteo Salvini last month said a potential veto would be a “hostile act” against the country. Prime Minister Giorgia Meloni said last year that the European Commission was dragging its feet when it had “asked us for years to find a solution” to the national airline’s financial troubles.
The companies will give up lucrative takeoff and landing slots at Milan Linate airport to allow a rival to develop routes from there to central Europe. They will also divest assets to allow one or two rivals to run flights between Rome or Milan and other central European airports.
On highly profitable transatlantic routes the companies will help rivals via cooperation deals or slot swaps to increase improve connections on routes to North America.
The Commission will assess potential rivals who plan to take up these offers and will have to approve them separately before the Lufthansa deal can be completed.
Lufthansa is buying a 41 percent stake in ITA via a €325 million capital increase with the option of purchasing the rest from the Italian government at a later date.
The Italian government had been keen to find a buyer for ITA Airways, which started in 2020 as the country’s state-owned carrier after the collapse of Alitalia and following months of negotiations with the EU on a rescue plan. A series of Italian bailouts and other financial aid for Alitalia over several decades had made it a near-constant point of friction with EU competition enforcers.
Lufthansa overtook Air France as Europe’s biggest airline in 2019, building on an expansion that has seen it buy up three smaller European airlines over the past 20 years. This has left a sour legacy. In the Brussels Airlines takeover, there were no takers for Lufthansa’s offer of airport takeoff and landing slots.
The Commission has since raised the bar on airline deals, warning that ceding slots isn’t an effective way of tackling problems especially now that pandemic-hit airlines are reluctant to enter new routes.
Regulators leaned on Korean Air to sell a cargo unit and help a rival as a condition to approving its merger with a rival earlier this year.
International Airlines Group, the parent of British Airways and Iberia, last month made an offer to the EU to try and win permission for its takeover of smaller Spanish rival Air Europa. Air France-KLM is taking a minority stake in Scandinavian Airlines (SAS) and is reportedly interested in buying TAP Air Portugal.
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