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Italian media speculate that Lufthansa is looking for a new partner to acquire a majority stake in ITA Airways. The name that is mentioned most often is that of the Italian railway company Ferrovie Dello State Italiane, or FS for short. ITA Airways’ future now seems to depend on Lufthansa and Italian railway company FS.
The privatization of ITA Airways continues to surprise observers as potential buyers are constantly changing. After the initial interest of Lufthansa Group at the beginning of this year following a joint offer from Lufthansa and shipping company MSC Group. They seemed in pole position until a consortium led by US investor Certares, Delta Air Lines, and Air France-KLM entered the scene.
The Italian Ministry of Economic Affairs and Finance entered exclusive negotiations with Certares that were expected to result in a firm agreement. But the new Meloni Administration opted not to extend the period of exclusivity after October, which reopened options for Lufthansa and MSC for new negotiations. The German/Swiss consortium was given exclusive access to ITA’s data room until MSC Group caught many by surprise by announcing early this week that it would withdraw from the bidding process. MSC stated it did no longer recognize conditions in the current bidding process, an indication that things have become blurred.
The MSC decision has left privatization in turmoil. Certares seems out of the picture altogether now, which would make Lufthansa the sole candidate. The German airline group is keeping its lips tight and isn’t sharing its cards with the media. Italian newspapers report that Lufthansa might have three options now: go it alone and make an all-out bid for ITA Airways, forgo the opportunity and close the book on ITA, or find a partner.
This is where FS comes into the picture again. The Italian rail company has been touted as the buyer of ITA’s predecessor Alitalia in 2019, when it teamed up with Atlantia, Delta Air Lines, the Ministry of Economic Affair and Finance, and initially easyJet to acquire eighty percent of the ailing airline. Although this bid failed, some, including Ryanair CEO Michael O’Leary, have always believed that Fs would eventually buy ITA Airways.
La Corriere Della Sera reports that a joint offer could leave Lufthansa with a 51 percent share of ITA for €250 million, with FS buying 29 percent for an undisclosed amount. The Italian state would retain twenty percent of the airline. This compares to just twenty percent for Lufthansa in the offer with MSC, in which the shipping group would take a sixty percent share. The Certares consortium was offered a 50.01 percent share, with the Italian state retaining 49.99 percent.
For the government, it is key that ITA Airways finds itself “a solid industrial partner to guarantee a certain future for the airline”, Minister of Economic Affairs and Finance, Giancarlo Giorgetti, reportedly said in a press conference on Tuesday. And this needs to be done quickly, as according to media reports in Italia, ITA is running out of cash quickly. Despite securing another €400 million in state support recently, its cash is set to be reduced to just €100 million in the coming months. The carrier can count on a final €250 million installment of the original €1.35 billion that was provided in 2021. Earlier this month, ITA said that it had secured the finance for the acquisition of 39 new aircraft in 2023.
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