2024-07-03 14:15:49
The EU Commission has agreed that Lufthansa may take over the Italian airline Ita.
Lufthansa is allowed to take over the Italian state-owned airline Ita. However, the traditional German company must meet a number of conditions to ensure competition, as the EU Commission announced.
Lufthansa has made commitments that “fully address the Commission’s competition concerns,” the authority announced on Wednesday. EU competition watchdogs had suspected that a merger could reduce competition on some routes and thus lead to higher prices.
The negotiations and examinations surrounding the entry of Europe’s highest-revenue airline group into its previous Italian competitor have been dragging on for more than a year. Italia Trasporto Aereo (ITA) emerged in 2020 from the state-owned airline Alitalia, which had repeatedly run into severe turbulence. The company currently has around 4,500 employees.
By comparison, the Lufthansa Group currently has almost 99,000 employees and has already integrated three former state airlines in the past: Swiss, Austrian and Brussels Airways. The brands as well as the hubs in the home countries of Switzerland, Austria and Belgium have been retained. Ita is not the official legal successor to Alitalia, but has secured the rights to the legendary name, which, according to company sources, could soon be revived.
Lufthansa CEO Carsten Spohr had recently expressed optimism that he would receive approval from Brussels quickly. With the takeover, Lufthansa is gaining access to the Italian market, which is particularly lucrative due to its close ties to the USA. The fact that Ita is another airline that is being broken up into the Sky Team alliance dominated by Air France is a desired side effect.
According to many experts, Ita could not survive on its own. In its home market, it has been pushed into the background by low-cost airlines such as Ryanair and Easyjet. On the profitable routes across the Atlantic, it is struggling to compete with the power of the much larger US providers. This is much easier in a strong alliance such as with Lufthansa, as the EU Commission has also acknowledged.
It was precisely on this point that the EU competition authorities had raised concerns because Lufthansa also makes agreements with United and Air Canada in a joint venture over the North Atlantic. However, all other US carriers as well as Lufthansa’s European competitors IAG, British Airways and Air France-KLM are also active in the world’s most lucrative air transport market. In March, the Commission was convinced that the competitive pressure exerted by other airlines on routes between Italy and the USA and to and from Canada and Japan was negligible.
EU officials also had concerns that Lufthansa could concentrate too much market power on short-haul routes between Italy and central European countries. Although there is competition – primarily from companies such as Ryanair – such low-cost airlines often take off from remote airports. Lufthansa has also been active in northern Italy for years with its own regional airline Air Dolomiti.
The EU Commission was particularly concerned about disadvantages for consumers. If there is little competition on routes and a lot of market power is concentrated in one provider, this provider can theoretically charge prices above the usual market level. Customers are then unable to switch to cheaper competitors or are only able to do so to a limited extent. This is another reason why there are strict competition rules in the EU.
Italy’s right-wing government under Prime Minister Giorgia Meloni has since suspected that other competitors wanted to slow down the takeover in Brussels. There were also open accusations from Rome against France and Air France.
Savings measures for fleet and personnel already overcome
Similar to Swiss, which was taken over in 2007, Ita is a restructured company that has gone through painful savings in terms of fleet and personnel. With joint purchasing and better planning, it could quickly make operating profits, say Lufthansa experts. And for 2027, the joint business plan of Lufthansa and the Rome Finance Ministry from the previous year already envisaged sales of 4.1 billion euros (2022: 1.6 billion).