Ita-Lufthansa, the never-ending story: agreement starting from 2025
Not just the willingness to cede a currently modest share of the slots at Milan's Linate airport to obtain approval for the acquisition of Ita Airways. In the list of so-called “remedies” just sent to Brussels, Lufthansa also opens up to a review of some of the new European routes, in particular the direct Rome-Munich flight, where a sort of monopoly would be created, with the need to space for a third operator. To incentivize the potential competitor, a risk hedging mechanism could be used, which in practice would have to be assumed by Lufthansa. This information is reported by Mf. The matter is different for the long haul. The German group seems intent on maintaining a firm position in defense of the routes to the North America. Among the connections in Brussels' sights there is, for example, the Rome-Washington.
According to what MF-Milano Finanza understands, the Competition Directorate of the EU Commission assesses the market share as too high, however, including in the account with ITA all the connections operated by the Atlantic Joint Venture, the commercial agreement that links the Lufthansa group to Air Canada and United Airlines. This calculation method is not shared by the Germans, for whom the market share to be considered is only that of the group added to that of Ita, leaving out Air Canada and United. TOAt the moment, North American routes are not included in the list of remedies sent by Lufthansa, and it is easy to hypothesize that they will represent one of the critical points of the negotiations with the Commission.
There is more realism than optimism regarding the timing of the discussions between Ita and Lufthansa: they will not be short. The sending of the remedies has moved the end of Phase 1 and the beginning of Phase 2 from 15 to 29 January, which provides for a period of 90 working days during which the real negotiations with the EU Antitrust will begin. Each deepening will interrupt and freeze the calendar until the next stage and so on. Therefore, it is estimated that it will be July before receiving the definitive response from Brussels. Only at that point, in the event of a green light, will Lufthansa be able to proceed by paying the 325 million euro capital increase into Ita's coffers, which will give it a 41% share, joint control in governance with the shareholder public prosecutor of the Economy and the choice of the CEO. For the real take-off, therefore, it is not excluded that it will reach 2025. The intention of the German company is to gradually increase up to 100% of the capital of the Italian company, based on the put and call options provided for in the contract.
In the initial phase, as CEO Carsten Spohr reiterated to shareholders, Lufthansa will not consolidate Ita in the balance sheet. But it is not said, as was circulated at the time of the agreement, that the acquisition of a subsequent share to reach the majority must necessarily take place when the Italian company has reached operational break-even: Lufthansa, in fact, could get ahead of the curve if it sees encouraging signs emerging from Ita Airways' accounts.
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