• 

  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

Italy's government has revealed it is in exclusive negotiations with a consortium comprised of Certares, Air France-KLM and Delta Air Lines regarding the sale of national carrier ITA Airways. The group fended off competition from Lufthansa and MSC Group and now looks set to takeover. We take a closer at this developing story below.

Air France-KLM and Delta consortium frontrunner to buy ITA

The sale of Italian flag carrier ITA Airways has moved a step closer to reality after the Italian government announced it will initiate exclusive talks with equity fund Certares, Air France-KLM and Delta Air Lines. Italy's Finance Ministry stated,

"After exclusive talks, a binding agreement will be signed only if the outcome will be fully satisfactory for the public shareholder."

The ministry revealed that the Certares-led bid was more in line with its aims and now looks to have seen off a rival bid from German carrier Lufthansa and Swiss shipping group MSC.

As Simple Flying reported last week, bids for ITA Airways closed on August 23rd. The initial bidding deadline passed in May, but the Italian government claimed the bids weren't good enough and invited interested parties to resubmit proposals.

ITA has been valued at around 950 million euros, with the Certares bid reportedly offering 600 million euros for a 55% stake. This will be broken down to 40.1% for the US-based equity group, 9.9% for Air France-KLM, and 5% for Delta, with the remaining 45% staying in public hands.

Lufthansa responds

Rejected bidder Lufthansa has already offered a response following the Italian government's announcement on Wednesday. Lufthansa said,

"We take note of the decision of the Italian government. Our joint offer together with MSC was the better solution for ITA, from our point of view. Apparently, a path is now being chosen that allows for more state influence and does not provide for a complete privatization of ITA."

A critical difference in the two bids was that the Air-France KLM and Delta proposal will grant the Italian government a 45% stake in the airline, while Lufthansa's proposal reportedly would not budge from its 20% offer to the State.

Discover more aviation news with Simple Flying.

National election next month

While today's announcement is promising news for the Certares-led bid, everything could change depending on how next month's general election pans out. Based on recent polls, a coalition led by right-wing party Fratelli d'Italia could come into power and reverse any privatization given its populist leanings.

Italian Prime Minister Mario Draghi wants to reach an agreement quickly, stating that the sale process "won’t be left to the next government; we have to do our duty." The current administration has set a deadline of September 10th for a preliminary agreement, two weeks before the Italian general election on September 25th.

There are other complications that also need to be ironed out if the sale is to go through smoothly. This includes Air France-KLM owing billions in state-backed loans and a European Commission ban that limits stakes in rival carriers to 10%, although Air-France KLM plans to take a 9.9% stake under current proposals.

Do you think the Italian government has made the right decision? Do you believe ITA will benefit from this deal? Let us know in the comments.