Hours after Lufthansa formally submitted its bid for up to a 40% stake in ITA Airways, Air France-KLM has announced that it won't be pursuing a deal. The statement puts Lufthansa in the lead to become the newest shareholder in the newly formed Italian flag carrier. Let's find out more.

Air France-KLM bows out

According to Reuters, Air France-KLM won't be pursuing a bid to buy into ITA, instead deciding to remain a close partner through the SkyTeam alliance for now. Last August, the Italian government was in exclusive talks with the consortium made up of AF-KLM, Delta Air Lines, and Certares. However, after a deal couldn't be struck, more suitors were invited to put forth offers.

Lufthansa has also been looking to own a piece of ITA Airways, having previously submitted a bid with the MSC Group. Now, the carrier seems to be going it alone and has put forward an offer to the Italian government, with Reuters reporting it is for a 40% share valued at €200-300 million ($215.8-$323.7mn).

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Lufthansa Boeing 747-800 D-ABYH
Photo: Vincenzo Pace | Simple Flying

With AF-KLM out of the running, it seems like an easier path for Lufthansa, assuming the government believes the given valuation of around €1 billion ($1.08bn) is a fair one. Considering Italy previously rejected offers due to their low value, this is not a given, but as the only bidder Lufthansa does have an advantage going in.

In a statement, the French-Dutch airline group said,

"Air France will continue to closely monitor the privatisation process and hereby reasserts its strong interest to maintain its commercial relationship with ITA, which is a SkyTeam member."

New member of the Lufthansa Group?

The next step for the German giant is to sign a memorandum of understanding (MoU) and begin exclusive talks with the government, just as AF-KLM had done last year. Speaking about the discussions, Lufthansa said,

"These talks would primarily focus on the form of a possible equity investment, the commercial and operational integration of ITA into the Lufthansa Airline Group, as well as resulting synergies. In case of a binding agreement is reached, its implementation would be subject to approval by the relevant authorities."

An ITA Airways Airbus A320
Photo: Markus Mainka | Shutterstock

It will be a while before ITA formally becomes a part of the Lufthansa Group, and there is no certainty of a deal. However, the airline has emphasized the importance of the Italian market, which is the largest outside Germany and the US. The group already includes Air Dolomiti, a subsidiary dedicated to flights between Germany and Italy, highlighting the significance of its operations. The addition of ITA would open the door to a long-haul expansion that would see more connectivity into Italy in the long term.

Today's step marks the first in many as Lufthansa tries to secure its future in Italy and Air France-KLM opts to step away from the deal.

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What do you think about Lufthansa's bid for ITA Airways? Let us know in the comments!

Source: Reuters (1), (2)

  • ITA Airways Airbus A330 in sky
    ITA Airways
    IATA/ICAO Code:
    AZ/ITY
    Airline Type:
    Full Service Carrier
    Hub(s):
    Rome Fiumicino Airport
    Year Founded:
    2020
    Alliance:
    SkyTeam
    CEO:
    Fabio Lazzerini
    Country:
    Italy
  • Tom Boon-169
    Lufthansa
    IATA/ICAO Code:
    LH/DLH
    Airline Type:
    Full Service Carrier
    Hub(s):
    Frankfurt Airport, Munich Airport
    Year Founded:
    1953
    Alliance:
    Star Alliance
    Airline Group:
    Lufthansa Group
    CEO:
    Carsten Spohr
    Country:
    Germany