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ITA Airways, Lufthansa Partnership Moves Closer in New Approved Plan
The Board of Directors of ITA Airways, Italy’s flag carrier and wholly owned by the Italian Ministry of Economy and Finance (MEF), recently approved the business plan shared with the Lufthansa Group.
ITA Airways closed its 2022 with a loss of around 500 million euros. The EBITDA, a profitability indicator that shows a company’s income based on its operations, i.e. without taking into account interest, taxes, depreciation and amortization of assets, was also -338 million. These figures will undoubtedly influence the final price to be agreed upon with the German group, but the increase in fuel costs is likely to have played a significant role.
Despite the losses, ITA Airways has implemented a strong digitalization of its processes during 2022 and has also committed itself to the sustainability of its fleet, using new generation aircraft such as the Airbus A350 and sustainable fuels.
Lufthansa confirms its willingness to acquire 40% of ITA Airways to secure a strategic alliance in Italy. Although it is a minority stake, it will have an impact on the future of the Italian airline, which has been increasing the number of members in its “Volare” loyalty program and load factors on long-haul routes. The Italian airline is reportedly negotiating with Lufthansa to buy a 40 percent stake in the company, worth around €250-300 million, with the idea of buying the rest at a later stage.
Lufthansa CEO, Carsten Spohr, traveled to Rome on March 30 to meet Italian Economy Minister Giancarlo Giorgetti and ITA Airways President Antonino Turicchi, who approved the joint industrial plan. This will define the development of ITA Airways in terms of fleet, network and strategic objectives following the agreement with Lufthansa, and will take the industrial partnership between the two airlines one step further.
At the end of January, the Italian government signed a memorandum of understanding with Lufthansa, but the details of the negotiations have not yet been officially disclosed. However, it now seems clear that Lufthansa only wants to take a minority stake of the Italian airline.
However, the German airline is convinced that the industrial partnership will help turn things around and that it will be profitable, albeit being a minority shareholder. ITA Airways cannot continue to face the challenges of the domestic and international markets on its own. Fabio Lazzerini, CEO of ITA Airways, is fairly certain that the Italian Ministry of Economy will conclude the negotiations with an agreement that suits both the German group and the Italian airline.
The Lufthansa CEO was very clear stating that ITA Airways has lost money and this is reflected in the valuation, which is the last obstacle in the negotiations. However, he remains confident that he will be able to sign within the exclusivity period which expires on 24 April 2023.
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