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Lufthansa Rebuts EU Concerns, Says ITA Deal Will Boost Competition

The probe is still ongoing, but Lufthansa is confident that the deal will be approved.

Lufhtansa aircraft at Munich Airport. (Photo: AirlineGeeks | Fabian Behr)

The planned acquisition of shares in ITA Airways by the Lufthansa Group is being subject to a comprehensive investigation by the European Commission. The Commission announced on Jan. 23, 2024 that the deal, which would see the German airline acquire a 41% stake in the Italian airline for €325 million, will be subject to a pre-contractual “phase 2” review.

While the German carrier is eager to establish a stronger presence in the European aviation sector, the European Commission is concerned that the deal could lead to a reduction in competition in passenger air transport services on various short-haul and long-haul routes.

Regarding the issue, Margrethe Vestager, Executive Vice-President in charge of competition policy, had previously made a statement: “By opening the in-depth investigation, we want to further assess the transaction and ensure that the acquisition of ITA does not reduce competition in short-haul and long-haul traffic and that it will not lead to higher prices, less capacity or lower quality for passenger air transport services in and out of Italy.”

 Lufthansa Breaks Silence

In response to these claims, Lufthansa has issued an official statement: “On 23 January 2024, the Lufthansa Group received confirmation that the EU Commission will continue to examine the planned acquisition of shares in ITA Airways in a so-called phase 2.’ The Lufthansa Group will continue to follow this process closely and constructively.

The Lufthansa Group will continue to work vigorously for a swift conclusion of the EU Commission’s review and for the subsequent implementation of the investment. The company continues to firmly believe that the transaction will be approved following the review. ITA Airways is to become a complementary and important part of the Lufthansa Group’s multi-hub system, which currently consists of four network airlines. Lufthansa Group believes that participation in ITA will have an overall positive effect on competition in Italy and Europe.

Lufthansa Group has been in intensive discussions with the EU Commission since June 2023 in the run-up to the official notification a the participation and as part of the ‘Phase 1’ procedure.”

Consequences of Deal Loom Large

The Commission’s in-depth investigation adds a layer of uncertainty to the ITA-Lufthansa deal. While Lufthansa remains confident, analysts predict possible concessions or modifications to appease competition concerns. Smaller airlines express anxieties about potential market dominance, while consumers cautiously hope for improved connectivity without price hikes.

The next few months will be crucial in determining the fate of this high-stakes merger, with its ripple effects felt across the European aviation landscape. The Commission now has 90 working days, until June 6, 2024 to decide whether to greenlight the merger, demand concessions, or even block it altogether.

Tolga Karadeniz

Author

  • Tolga Karadeniz

    Tolga is a dedicated aviation enthusiast with years of experience in the industry. From an early age, his fascination with aviation went beyond a mere passion for travel, evolving into a deliberate exploration of the complex mechanics and engineering behind aircraft. As a writer, he aims to share insights , providing readers with a view into the complex inner workings of the aviation industry.

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