European regulators have approved Lufthansa Group’s bid to buy a 41% stake in Italian flag carrier ITA Airways, the company said on Wednesday. The deal, expected to close later this year, will set the stage for ITA to become the latest to take part in the wave of consolidation in the European industry.
As part of the move, ITA is expected to join the Miles & More loyalty program, Lufthansa executives said. And the company is “aiming” for the airline to become part of the Star Alliance.
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The EU gives the green light
The approval from the European Commission in Brussels came more than a year after the two companies first announced the deal, which will see Lufthansa take a 41% stake in ITA.
The deal gives Lufthansa Group the option to buy the remaining 59% of ITA’s shares in the future. If the Lufthansa Group decides to move forward on that front, it could come in 2025, under the deal approved this week by European Union officials.
The merger is expected to be completed by the fourth quarter of this year, Lufthansa Group said in a statement announcing the news. At that point, the company is planning for ITA’s “rapid integration” into the group, which already contains a host of European airlines.
“We look forward to welcoming ITA Airways and its outstanding employees as a new member of our airline family very soon,” Lufthansa Group CEO Carsten Spoor said in a statement on Wednesday.
ITA Airways was formed from the remnants of Alitalia in 2020 and the Italian government took over the beleaguered airline during the COVID-19 pandemic. To date, ITA has been unable to shake Alitalia’s longstanding reputation for losing money.
The same brand, new alliance and loyalty program are expected
By joining the Lufthansa Group, ITA Airways will remain the airline brand. This is in line with other mergers seen in the European airline industry.
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ITA will be the group’s sixth airline, joining Lufthansa, Eurowings, Swiss, Austrian Airlines and Brussels Airlines.
Immediately after the deal closes, Lufthansa Group said, ITA will begin code-sharing with its new sister brands.
ITA will also join the Miles & More loyalty program used by other airlines in the group and join the combined booking and sales channels, not to mention the “numerous synergies” the company can tap into with aircraft and fuel purchase decisions.
A key step still to come: a shift in alliances. While the full-service airlines of the Lufthansa Group are part of Star Alliance, ITA is part of SkyTeam today.
In the news release, Lufthansa Group said it intends for ITA to join Star Alliance in the “near future”.
This could potentially give Star Alliance loyalists more mileage earnings and opportunities to redeem partners on flights to Rome’s Fiumicino Leonardo da Vinci Airport (FCO), which will become Lufthansa Group’s southernmost hub, it said. apparently the company.
ITA footprint
ITA flies non-stop to just over half a dozen US cities from Rome. Its July 2024 US route map, as shown in the map below from Cirium, includes Los Angeles International Airport (LAX) and San Francisco International Airport (SFO) on the West Coast, Chicago O’Hare International Airport ( ORD) in the Midwest, and a host of East Coast airports: Boston Logan International Airport (BOS), New York’s John F. Kennedy International Airport (JFK), Washington Dulles International Airport (IAD), and Miami International Airport (MIA ).
Consolidation of European airlines
This acquisition of ITA also marks the latest step in a wave of airline consolidation in Europe.
The continent today is home to three major parent companies.
Together with the Lufthansa Group, the International Airlines Group owns major airlines such as British Airways, Iberia, Aer Lingus and low-cost Vueling, among others. (It’s worth noting that Finnair and Qatar Airways share Avios as loyalty currency with some IAG brands as well.)
Air France-KLM Group, which owns its two namesake brands based in Paris and Amsterdam respectively, has reached an agreement for a stake in Scandinavian Airlines. This still needs regulatory approval.
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