European regulators have approved Lufthansa Group bid to buy 41% stake in troubled Italian national airline ITA Airways, the company said Wednesday. The deal, expected to close later this year, would set the stage for ITA to become the latest company to join a wave of consolidation in the European industry.
As part of this move, ITA is expected to join Miles & More loyalty program, Lufthansa executives said. And the company is “targeting” the airline to become part of its Star Alliance.
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EU gives green light
The approval from the European Commission in Brussels comes more than a year after the two companies first announced the deal, under which Lufthansa would buy a 41% stake in ITA.
The deal gives Lufthansa Group the right to buy back the remaining 59% of ITA at a later date. If Lufthansa Group decides to move forward on that front, it could be as early as 2025, according to the deal approved by European Union officials this week.
The Lufthansa Group said in a statement announcing the news that the merger is expected to be completed in the fourth quarter of this year. At the time, the company said it was planning for a “rapid integration” of ITA into the group, which already has several European airlines.
“We look forward to welcoming ITA Airways and its outstanding employees as a new member of our airline family,” said Lufthansa Group CEO Carsten Spoor in a statement. statement Wednesday.
ITA Airways was formed from the remains of Alitalia in 2020, and the Italian government took over the struggling airline during the COVID-19 pandemic. So far, ITA has been unable to shake off Alitalia’s long-standing reputation for loss-making operations.
Same brand, new alliance and much-anticipated loyalty program
When it joins the Lufthansa Group, ITA Airways will remain the airline’s brand, in line with other mergers 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.
Lufthansa Group said that immediately after the deal is completed, ITA will begin codeshare cooperation with the newly established sister brands.
ITA will also join the Miles & More loyalty program used by other airlines in the group and participate in combined booking and sales channels, not to mention the “many partnerships” the company can use with aircraft and fuel purchasing decisions.
One important step is yet to come: a change in alliances. While the Lufthansa Group’s full-service airlines are part of Star Alliance, ITA is part of Sky Group Today.
Announcing the news, Lufthansa Group said it was aiming to bring ITA into Star Alliance in the “near future”.
This is likely to give Star Alliance loyalists more opportunities to earn miles and redeem partner rewards on flights to Rome Fiumicino Leonardo da Vinci Airport (FCO), which will become the Lufthansa Group’s southernmost hub, the company noted.
ITA Footprint
ITA flies nonstop to more than a half-dozen U.S. cities from Rome. The airline’s July 2024 U.S. 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’s O’Hare International Airport (ORD) in the Midwest, and several East Coast airports: Boston Logan International Airport (BOS), New York’s John F. Kennedy International Airport (JFK), Washington’s Dulles International Airport (IAD), and Miami International Airport (MIA).
European airline merger
The acquisition of ITA also marks the latest step in a wave of airline consolidation in Europe.
Today, the continent is home to three major parent companies.
Along with Lufthansa Group, International Airlines Group owns major airlines such as British Airways, Iberia, Aer Lingus and low-cost Vueling, among others. (It should be noted that Finnair and Qatar Airways share Greeting is also a loyalty currency for some IAG brands.)
Air France-KLM Group, which owns two eponymous brands headquartered in Paris and Amsterdam, has reached an agreement to buy shares in Scandinavian Airlines. That still requires regulatory approval.
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