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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
The Lufthansa Group is working on two major transactions this week. The German aerospace giant is looking to purchase 20% of Italy's ITA Airways and sell 20% of its stake in maintenance arm Lufthansa Technik. Let's explore further.
Picking up a piece of ITA Airways
Lufthansa is currently hoping to buy 20% of Alitalia's successor ITA Airways. The airline is partnering with Italian shipping giant MSC, which will buy the larger 60% share. The pair officially made an offer on Monday, making long-held rumors official just as bidding closed, according to Reuters.
However, it won't be a single-horse race, with Air France-KLM and Delta Air Lines partnering with American firm Certares to launch their own bid for ITA. Indigo Partners, the force behind names like Wizz Air, was also in the mix but dropped out at the final minute yesterday.
The asking price for ITA remains hush-hush but is estimated at between €1-2 billion ($1.07bn-$2.14bn) currently. The Italian state will hold 20% of the airline post-sale as well and is looking to wrap the whole privatization process by the end of the year.
Discover more aviation news as they unfold!
Change in plans at Lufthansa Technik
On the other side of the ledger, Lufthansa has decided to drop plans to list a part of its stake in its maintenance and repair arm. Instead, the airline is now looking to sell 20% of the firm to private equity firms later in 2022, according to Reuters. The sale could raise over $1 billion for the carrier at an estimated valuation of €5-€8 billion ($5.36bn-$8.57bn) for Lufthansa Technik.
With markets still reeling from the invasion of Ukraine, a 20% private sale will yield strong liquidity for Lufthansa and help the group along in its recovery strategy. A major part of the strategy is divesting from non-airline businesses, at least to a certain extent.
Competitors Air France-KLM recently inked a deal to invest €500 million ($536mn) with Apollo Global Management to expand its repairs unit. For now, Lufthansa is looking to raise its own funds to grow operations post-pandemic.
Looking to the future
It has been a busy May for Lufthansa. Aside from these two important deals, the German giant has been increasing its order book with Boeing as well. The carrier has added seven more 787s (the livery of the first one has just been released) and committed to eight 777X freighters for its cargo arm.
To prepare for the post-pandemic market, Lufthansa has been talking up Boeing too, reiterating that it has faith in the US giant despite its many missteps currently. For now, the airline is clearly looking to the future.
What do you think about Lufthansa's purchase and sale deals currently? Let us know in the comments!