German flag carrier Lufthansa may submit a bid for Italy's ITA Airways as early as the next week, according to a Reuters report. The news comes as the Italian government is accelerating the airline's privatization efforts.

Full privatization efforts

Italy's national airline ITA Airways, the successor of loss-making Alitalia, has been looking for a new owner to help it out of its financial difficulties since its launch in the autumn of 2021.

To speed up the airline's privatization, the country's newly elected government passed a decree which allows bidders to buy stakes in ITA through multiple capital increases.

According to a source quoted by Reuters, Lufthansa is at the forefront of entering ITA's capital. It could buy a 40% stake in ITA through a capital increase worth between €300 million and €350 million.

Photo: Vincenzo Pace I Simple Flying

At the start of the process, the German airline had entered into an agreement with shipping group MSC to submit a bid for ITA. However, in November 2022, MSC pulled out of a joint venture that considered buying a stake in ITA.

Meanwhile, Lufthansa remained interested in acquiring an ITA Airways stake as Italy is Lufthansa's largest market in Europe, outside of its home markets.

Back in March, Simple Flying reported that the CEO of Lufthansa, Carsten Spohr, called Italy the world's second most important strategic aviation market. Spohr was quoted as saying:

"All those who have been involved in the matter for a while will know that Italy is the most important international market for us in Europe, and it's number two worldwide, second only to the US.

Does Lufthansa remain the only choice for ITA?

Currently, Lufthansa appears to be the only viable option for Italy's flag carrier, ITA Airways, even though ITA had initially chosen another industry player to initiate negotiations for acquiring a majority stake.

In September 2022, Italy selected the Certares-led consortium, backed by Air France-KLM and Delta Air Lines, for exclusive talks on buying a majority stake in the country's national carrier.

The Certares-led consortium offer was "deemed more in line with the objectives set by the Prime Minister's Decree," Italy's Ministry of Economy and Finance said at the time.

However, exclusive talks with US-based private equity fund Certares ended without any deal. The Ministry of Economy said in a statement dated October 31, 2022:

"Exclusivity obligations granted on August 31 end today."

ITA launched on October 15, 2021, the day after Alitalia took its final flight. With plans to increase its fleet to 105 by 2025, the airline currently operates a total of 73 aircraft, including the Airbus A319, A320, A330, and A350, according to ch-aviation data.

In December 2022, the airline's CEO and General Director also said that "passenger revenues in 2022 to exceed the value estimated in the budget". The news came alongside ITA's announcement of new destinations between Rome Fiumicino International Airport (FCO) and Washington Dulles International Airport (IAD).

Source: Reuters