The European Commission launches an in-depth look at competitive costs of the Lufthansa deal for ITA
The European Commission has announced an in-depth investigation of German airline Lufthansa’s planned takeover of Italian carrier ITA Airways citing competitive concerns
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.The European Commission on Tuesday announced an in-depth investigation of German airline Lufthansa’s planned takeover of Italian carrier ITA Airways, citing competitive concerns.
Lufthansa signed a deal last year for a 41% minority share in the long-struggling ITA Airways, formerly Alitalia. The deal calls for a 325-million-euro ($354 million) investment by Lufthansa, and another 250 million euros ($272 million) from the Italian Finance Ministry. Lufthansa would have the option of buying the remaining shares at a later date.
The European Commission cited concerns about reduced competition on short-haul flights between Italy and Central Europe and long-haul routes between Italy and the United States, Canada, Japan and India.
ITA Airways and Lufthansa compete on the Central European flights, where low-cost players generally serve secondary airports. On the longer-haul routes, ITA is competing against Lufthansa and its partners Air Canada and United. The commission also said the deal could strengthen ITA’s dominant position at Milan’s Linate airport.
The commission said that it would make a decision by June 6. The commission has the power to set conditions for the deal. It said that Lufthansa’s response to preliminary concerns was insufficient.
Airline analyst Gregory Alegi said that the commission’s concerns were a paradox, since 20 years ago it had taken the position that the European Union market wasn’t big enough for the many flagship carriers that existed at the time.
“Now you start working about not enough competition?" said Alegi, a LUISS University professor, calling the flip in approach “an indictment of this high-level attempt to shape markets by regulation.”
ITA was formed in October 2021 on the ashes of Alitalia, which had gone through a series of bankruptcies, government bailouts and failed partnerships as subsequent governments tried to prevent its demise. At the time, the commission insisted on a new name to mark a break with the 74-year-old carrier’s past.
“The commission’s patience has been tested with Alitalia’s several bailouts, and ITA airways came about, because a previous government would not let it collapse, so there had to be a total break,’’ Alegi said.