The Italian government has asked parties interested in taking over national carrier ITA Airways to resubmit their bids after deeming current proposals insufficient. The two-horse race to take over the Italian carrier will likely conclude within the next few weeks. We take a closer look below.
ITA bids not up to scratch
At a press conference in Italy yesterday, Italian Economy Minister Daniele Franco revealed that consortiums looking to take over ITA Airways will be asked to come up with new bids, as the Italian government believes current proposals are not good enough.
Bidding for the airline closed on May 23rd, leaving just two interested coalitions after American investment firm Indigo Partners dropped out of the picture. According to Franco, current bids do not entirely match up with the government's privatization goals for ITA.
The two rival groups contending for ownership of ITA are Lufthansa and Swiss-Italian shipping group MSC facing an Air France-KLM, Delta Air Lines and equity-firm Certares consortium.
There is a clear sense of urgency about the takeover deal as outgoing Prime Minister Mario Draghi seeks to rubberstamp an agreement before he leaves office next month.
Lufthansa's patience running thin
The Italian government risks Lufthansa dropping out entirely if it can't act quickly, following comments from the airline's chief executive. ITA's sale to MSC and Lufthansa looked all set to proceed in February before other interested parties entered the frame.
Lufthansa CEO Carsten Spohr said this week,
"We believe we need to be fast here. Our patience is not endless. They need a partner and we are the right one."
The Lufthansa-MSC partnership was initially considered the frontrunner to take over after reports of Lufthansa's interest emerged in January. Italian officials reportedly prefer this option as it involves a majority 60% stake for Swiss-Italian firm MSC, with German carrier Lufthansa taking a 40% stake.
However, there is a convincing case from the Certares-led group, which includes ITA's fellow SkyTeam alliance members KLM, Air France and Delta.
While this move would certainly make sense given the SkyTeam connection, the Lufthansa-MSC bid is said to be stronger financially at between €1.2 billion ($1.22 billion) and €1.5 billion ($1.53 billion).
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Accelerating the takeover
Prime Minister Mario Draghi, who is still active in a caretaker capacity after announcing his resignation in July, is eager to reach the finishing line on any takeover before he leaves.
Draghi will leave office on September 25th as Italy undergoes a general election and is reportedly hoping to proceed with the sale within the next 10 days.
Italian officials had previously penciled in a takeover for June, but things did not pan out as expected. The loss-making carrier recently requested a €400 million bailout to add to the €700 million it received in 2021.
Who do you think is the best candidate to take over ITA Airways? Let us know your insights in the comments.