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Lufthansa is today taking the first step towards taking over the Italian state airline ITA. A lot will change for passengers; ticket prices could rise.
Does Lufthansa want to take over ITA completely?
As CEO Carsten Spohr explains to the FAZ, a 100 percent takeover is the clear goal. However, the schedule is questionable. First, Lufthansa is taking over a minority of 41 percent in the previously state-owned airline ITA for a capital contribution of 325 million euros. The complete takeover of Alitalia's successor with around 100 aircraft and 5,000 employees has already been contractually agreed with the government in Rome since May 2023. Lufthansa can then take over 90 percent and later the entire Italia Trasporto Aereo (ITA) in two further steps if the business figures are correct.
From today's perspective, this is not yet planned for 2025. “It is in our interest to keep the Italian government on board in the next few months,” said Spohr. The complete takeover could then follow by 2033, for which a total sum of 830 million euros is being traded.
What does Lufthansa hope to achieve from the ITA deal?
Lufthansa is thus entering the air transport market in Italy. With currently almost 100 aircraft, ITA immediately becomes 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. Spohr speaks of added value for customers, employees and shareholders: “We will need around 18 months before we can leverage all synergies. As is so often the case, IT issues, for example, are a sticking point,” says Spohr.
According to Spohr, Lufthansa would not have taken the step without the prospect of a profit contribution in the three-digit million range. After Swiss, ITA should deliver the second highest contribution to earnings of all foreign subsidiaries.
Why is Italy so important?
“For Lufthansa, joining ITA is a huge opportunity,” explains ARD-Aviation expert Michael Immel. “The market in Italy offers great potential. After the USA, Italy has already been the second most important sales market for the crane airline, which has brought many Americans to southern Europe via the group's hubs in Frankfurt, Munich, Vienna and Zurich.”
But there are other factors. According to Immel, Lufthansa boss Carsten Spohr remains true to his strategy: not one large Lufthansa Classic, but numerous subsidiaries in a wide variety of European markets. “This also creates a regional anchor that should not be underestimated. The Swiss have 'their' Swiss, the Austrians have 'their' Austrian Airlines, and the Italians now have an ITA in addition to Air Dolomiti, which is part of a strong aviation alliance. This concept also works financially,” says the industry expert.
Will ticket prices increase?
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. “Medium-haul holiday trips in Europe will definitely not be cheaper as a result of joining ITA. Flying is and will remain expensive,” explains Immel. For example, anyone planning a flight from Frankfurt to Bari in southern Italy during the Easter holidays has, on paper, many options.
“You can go south either directly and without a stopover with the Lufthansa subsidiary Discover Airlines. Or with Swiss to Zurich and from there with Air Dolomiti to Bari. Travelers can also fly via Vienna to Apulia. Or in the future they can first head to Rome and then continue .” These are all subsidiaries of Lufthansa, which has long since noticed that you can make good money with holiday trips, emphasizes Immel. “And customers will also experience this when it comes to ticket prices.”
The EU wants to create competition with conditions. 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.
What does the deal mean for ITA customers?
A few things will also change for ITA's existing customers. With the change from the Skyteam airline alliance to the Star Alliance, which is dominated by Lufthansa, partner companies for any onward flights are changing, as is the infrastructure provided, which includes, for example, lounges at the airport.
Lufthansa wants to integrate regular ITA customers from the Volare frequent flyer program into its own Miles&More, and corresponding offers for evaluating status and miles should come soon.
What is the situation with air traffic in Germany?
Overall, the situation in Germany remains tense. According to data from the aviation association BDL, air traffic grew only slowly in the first half of the year. The total number of seats available from January to June will be almost 120 million, four percent higher than in the same period last year, the BDL said last week. This corresponds to 86 percent of the level in 2019, the year before the outbreak of the corona pandemic.
“This means that air traffic continues to develop significantly weaker than in other European countries,” added the association. In the rest of Europe, the range of passenger flights is greater than ever before, with a volume of 107 percent of the pre-Corona level. Growth is being held back by the low availability of domestic flights. According to the BDL, it climbed by three percent compared to the previous year to just 50 percent in 2019.
“In Germany, Lufthansa and other airlines have been complaining for a long time about the high location costs compared to other European countries. In addition to increased fees for security checks at airports and the costs of air traffic control, the air traffic tax also has an impact on ticket prices,” states ARD-Aviation expert Immel.
