Lufthansa is one of the largest airlines in the world, with numerous subsidiaries covering
the whole aviation spectrum. It also has innovative specialist departments such as Lufthansa Systems
and Lufthansa Technik. ITA Airways, the successor to Alitalia as Italy’s national carrier,
has stated that MSC, a Swiss-Italian shipping corporation, and Lufthansa, have shown an
interest in purchasing a controlling stake in the state-owned company.
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MSC is the world’s largest container shipping
line. It also has a cruise company, MSC Cruises, and operates in the aviation industry by leasing
cargo planes to transport goods. MSC Group said late Monday in a statement that the merger
will exploit efficiencies in both passenger and cargo, adding that Lufthansa has already
expressed interest.
Aside from the mainline, Lufthansa owns several other carriers, including SWISS, Brussels
Airlines, Eurowings, and Austrian Airlines. Historically Lufthansa’s biggest challenge
in Italy has been competing with SkyTeam, between Alitalia and Air France-KLM. Alitalia
belonged to SkyTeam, and ITA Airways has joined the SkyTeam alliance as well.
If this were to happen, ITA Airways would
likely become a Lufthansa Group airline, operating alongside Lufthansa, SWISS, Austrian Airlines,
Brussels Airlines, etc. With ITA Airways cooperating with Air France-KLM and Delta, Lufthansa would
struggle to grow beyond its current position, especially for long-haul service.
MSC said: “Today MSC Group has expressed
to the Italian government its interest in acquiring a majority stake in ITA Airways.
The MSC group aims to create a partnership with the Italian government and Lufthansa.”
It added that Lufthansa had expressed its interest in taking part in the initiative
and that “MSC and Lufthansa, following today’s expression of interest, require an exclusivity
period of 90 business days”.
So if Lufthansa were to invest in ITA Airways, it seems that it would largely be about trying
to poach more market share in Italy from competitors. Lufthansa trying to get ITA Airways into the
Star Alliance transatlantic joint venture, though it’s anyone’s guess if that would
be approved by regulators. Apart from the significant minority stake
that a 40% acquisition would provide Lufthansa with, the partnership may also impact ITA's
network.
Indeed, Reuters notes that an aspect that has formed part of the discussions is developing
Rome-Fiumicino as more of an intercontinental hub. This would potentially have a particular
focus on African and American routes. In terms of the next steps, a meeting between
ITA's management team and board members is set to occur at the end of the month. This
will see the presentation of a strategic plan, with data and documents then being made available
to those potentially interested in investing. This will help companies like Lufthansa determine
ITA's worth.
ITA started operating last October after the Italian government bailed out once again the
long-struggling Alitalia and relaunched it under a new name. When it was launched, most
analysts said ITA was too small to survive alone and faced the prospect of being bought
by a bigger airline. Italy doesn’t exactly have the best geography
as a connecting hub; for example, for transatlantic flights, there’s potentially quite a bit
of backtracking for those wanting to travel to other points in Europe. Since then, it
has continued to lose money as the coronavirus pandemic continues to weigh on the airline
industry.
German air carrier Lufthansa plans to cut 33,000 flights from its winter schedule, about
10% of its total flight plan. CEO Carsten Spohr told the Frankfurter Allgemeine Sonntagszeitung
newspaper that there had been a sharp downturn in bookings, particularly in the mid-January
to February period.
"Above all, we are missing passengers in our home markets of Germany, Switzerland, Austria,
and Belgium, because these countries have been hit hardest by the pandemic wave," he
said.
A bout of illness and concerns about the omicron variant among its pilots has also caused Lufthansa
to ground about a dozen flights over the next two weeks.
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