Lufthansa has agreed to take a controlling stake in ITA, the Italian state-owned airline. A statement issued by the German airline on 25/5/2023 said that “Deutsche Lufthansa AG reached an agreement with the Italian Ministry of Economy and Finance… to acquire a minority stake in the Italian national carrier ITA Airways Lufthansa will obtain a 41 percent stake in ITA for EUR 325m through a capital increase”. The German airline is leaving open the possibility to buy the whole company, with it agreeing “on options to enable a potential acquisition of the remaining shares by Lufthansa at a later date.”
The overall Lufthansa strategy appears to be utilising the ITA – formerly Alitalia – brand and geographical presence to gain market-share in the Mediterranean region. ITA’s freight capability is modest, however in explaining the investment Lufthansa points to Italy’s “export orientated economy” as part of the attraction of buying into ITA, however the main thrust seems to be the passenger business. ITA will retain not just its brand but much of its management and operations including its hubs in Rome and Milan.
The implications for air freight seem limited. The most high-profile issue is the confirmation that MSC is not interested in buying into ITA, having begun to develop its own in-house airfreight capabilities in 2022. In early 2022 MSC was considering bidding with Lufthansa for ITA but pulled-out of the negotiations later in the year.
The investment by Lufthansa, does however represent further consolidation in the European airline sector which in theory ought to have implications for the belly-freight market. ITA has long been an issue for the Italian government, with its predecessor, Alitalia having record losses. The move strengthens Lufthansa on international routes, but it does little to assuage the competition from the Gulf-based carriers and low-cost European regional airlines. It should also be observed that both AirFranceKLM and Etihad have made previous attempts to invest in Alitalia, with little success.
Source: Ti Insights
Author: Thomas Cullen
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