German Lufthansa gets the green light to acquire Italian ITA Airways

German Lufthansa gets the green light to acquire Italian ITA Airways
German Lufthansa gets the green light to acquire Italian ITA Airways

The Italian State and Lufthansa They had signed in 2023 an agreement on the German company’s participation of up to 41%, with the option to reach 100% at a later stage.

The final authorization of the operation was communicated by Lufthansa itself in a publication made on its account Instagram: “Great news: EU Commission has given the green light, and ITA Airways will soon become part of the Lufthansa Group family.”

“Legal closure is expected end in the fourth quarter of 2024. Until then, ITA Airways and Lufthansa Group will remain competitors. We will communicate further details as soon as the formalities of the case have been completed,” he added.

“We are preparing for a joint takeoff and we plan to collaborate closely together on a number of different initiatives, such as lounge access, loyalty programs, customer service and airport touchpoints,” he concluded.

The conditions set by the European Commission

In any case, the approval granted by the EU authority is conditioned full compliance with the solutions offered by Lufthansa and the Italian Ministry of Economy and Finance, the Commission clarified in a statement.

In January, the European Commission launched an in-depth investigation into the initiative, arguing that it was necessary to analyse the possible impact of the operation on competing firms in certain lines.

The Commission’s concerns They focused on the connections between Italy and the countries of Central Europe.where the main problems in terms of competition would arise.

Therefore, Lufthansa or the Italian State “will make one or two rival airlines available the assets necessary to enable them to initiate non-stop flights between Rome or Milan and certain airports in Central Europe,” the Commission announced.

In addition, conditions were set for long-haul flights to destinations such as the USA, Canada, Japan and India. At this point, it was agreed that Lufthansa and the Italian state should “enter into agreements with rivals to improve their competitiveness on the long-haul routes in question, for example through interlining agreements or slot exchanges.”

The story of Alitalia, with one foot in Italy and the other in Argentina

Alitalia, the national airline of Italy, fIt was founded in 1946 as a state-owned company, and since then it has played a key role in connecting Italy to the rest of the world, including a particularly close relationship with Argentina.

Officially named Italian AirlinesAlitalia made its first flight in May 1947, from Turin to Rome. Throughout the 1950s and 1960s, it established itself as one of Europe’s leading airlines, gaining a reputation for elegant styling and high-quality service.

The 1960s were a golden age for commercial aviation, and Alitalia was no exception. In 1960, the airline was the official carrier of the Olympic Games in Rome, which increased its prestige and international recognition.

Alitalia rapidly expanded its route network, connecting Italy with destinations around the world, including Buenos Aires in Argentina. This connection became an emblematic routenot only because of the large number of Italians living in Argentina, but also because of the growing community of Argentines interested in visiting and exploring Italy.

The relationship between Alitalia and Argentina dates back to the 1940swhen transatlantic flights became a reality for the airline. The Rome-Buenos Aires route became one of Alitalia’s most important, facilitating cultural and economic exchange between the two countries. For many years, Alitalia was the preferred option for Argentine travelers heading to Italy, whether for tourism, business or to visit relatives.

Argentina had in those years a very large community of Italian immigrantswith millions of Argentinians of Italian descent, who maintained strong cultural and economic ties with their home country. This made Alitalia flights a vital connection and the airline became an essential air bridge, providing transport and also an emotional link between the two countries.

When did Alitalia’s financial problems begin?

After sustaining its initial success for many decades, Alitalia began to face serious financial problems in the 1990s. The liberalization of the European airline market brought with it fierce competition, and Alitalia struggled to remain competitive against low-cost airlines and other major European carriers.

But the problems were compounded by a series of factors linked to its state naturewhich deepened as the public budget shrank. This included failed strategic decisions, questions about management and a workload with increasing costs.

By 2008, Alitalia’s financial situation had deteriorated so much that the airline was on the verge of bankruptcy. A consortium of Italian investors, backed by the government, stepped in to save the airline, creating a new entity called Alitalia/CAI (Compagnia Aerea Italiana). However, this restructuring failed to resolve the underlying problemsand Alitalia continued to accumulate losses.

In the following years, Alitalia faced a series of challenges that eventually led to its bankruptcy. Competition from low-cost airlines, high operating costs and economic instability in Europe made it increasingly difficult for Alitalia to stay afloat. In 2017, after Employees will reject a restructuring plan which included pay cuts and layoffs, the airline declared bankruptcy and was placed under extraordinary administration.

Despite several attempts to find a buyer or investor, no definitive agreement materialized, and Alitalia continued to operate under constant uncertainty. The COVID-19 pandemic in 2020 further complicated the situationas travel restrictions and declining demand for flights hit the aviation industry hard.

The farewell of Alitalia and the birth of ITA Airways

In October 2021, after years of uncertainty and financial problems, Alitalia officially ceased its operationsInstead, a new airline called Italy Air Transport (ITA Airways), which began operations with a reduced fleet and a more efficient cost structure.

ITA Airways positioned itself as the successor to Alitalia, with the mission of reviving the historic connection between Italy and the rest of the world, including Argentina. Thus, it maintained many of Alitalia’s traditional routes, including the historic Rome-Buenos Aires connection.

Despite starting in a challenging environment due to the pandemic, ITA Airways managed to quickly establish itself as a major player in the European commercial aviation market.

So much so that in 2023, attracted the attention of Germany’s LufthansaEurope’s largest airline. Lufthansa saw in ITA Airways an opportunity to expand its presence in the Italian market and strengthen its route network in Europe and beyond.

In May 2023, Lufthansa began negotiations to acquire a majority stake in ITA Airways, an operation that remained under the scrutiny of competition authorities in the European Union and was finally unblocked on Wednesday. The final merger is now expected to be achieved by the end of 2024, it was reported.

 
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