A deal between ITA Airways and Lufthansa/MSC is far from done. After taking a distant approach until now, Delta Air Lines, Air France-KLM, and US investor Certares have expressed an interest in buying a majority share in the Italian airline. It is said that Indigo Partners is also interested in ITA. ‘Delta-consortium and Indigo Partners interested in ITA Airways’.
The news was reported on March 10 by the Italian newspaper La Repubblica, quoting a source that has seen the letter that was sent by the US/European consortium to ITA Airways. The Italian airline has not confirmed the story, in contrast to January 24, when it acknowledged the interest expressed by Lufthansa and Swiss shipping company MSC Group. Delta and Air France-KLM have not confirmed the media report.
Lufthansa CEO Carsten Spohr said last week during the 2021 results presentation that his airline and MSC were still going through the financial details in ITA’s data room. Once it would have a clearer picture of the situation of the new airline that succeeded Alitalia in October, Lufthansa/MSC would make a decision on buying either a minority or majority share or entering into a partnership.
Delta and Air France-KLM are already tied to ITA through the SkyTeam alliance which the carrier joined just weeks after launching services. Although an investment would make sense from the perspective of consolidation in Europe, buying into ITA is not without difficulties for Air France-KLM.
AF/KLM Group CEO Ben Smith said on February 17 that the losses incurred from previous investments by the French/Dutch airline in Alitalia still resonate. Both airlines are in restructurings mode as they try to recover from the Covid crisis. Smith also confirmed that the state aid provided by the French and Dutch governments currently excludes the liberty the participate in other airlines. At the same time, EU conditions prevent ITA Airways from accepting foreign investors before 2024.
The new names in the Italian report are those of Certares and Indigo. Certares is a New York-based private equity investor that is dedicated to the travel, tourism, and hospitality sectors. Certares also has offices in Luxemburg and Dubai. It is already an investor in Brazilian airline Azul and LATAM Airlines. Last December invested in Avia Solutions Group, which is advertised as “a leading player in the aerospace services industry.”
Indigo Partners also looking for a share
According to another source of La Repubblica, Indigo Partners has expressed its interest in ITA Airways, but if the group owned by Bill Franke is working with others isn’t known. Indigo is a majority shareholder in a number of key ultra-low-cost airlines like Wizz Air, Frontier, Volaris, and JetSMART. In February, Franke announced plans for Frontier Airlines to merge with US-rival Spirit Airlines, which already was part of Indigo in the past.
Indigo buying into ITA Airways might not be as surprising as it looks. Through Wizz Air, it has significantly increased its presence on the Italian market in 2021 and continues to work on that this year. This summer, Wizz Air will base 22 aircraft at seven different airports in Italy, of which five at Rome Fiumicino and six at Milan Malpensa. ITA is based in Milan Linate. Integrating ITA into the Indigo portfolio could strengthen its presence on the Italian market and bring synergies, as ITA is about the convert to an all-Airbus fleet that is already in use with Wizz Air.
