Europe's antitrust authority announced Wednesday its conditional approval of Lufthansa's plan to acquire a 41% stake in ITA Airways for €325 million ($350 million), provided the airlines relinquish flight slots to competitors.

Lufthansa €325M ITA Air Takeover : Antitrust Concerns Addressed

The European Commission stated that the remedies proposed by Deutsche Lufthansa AG and Italy's Ministry of Economy and Finance "fully address competition concerns." The ministry had nationalized Alitalia in 2020, rebranding it as ITA Airways.

Slot Surrender Agreements

Lufthansa and the Italian ministry agreed to cede slots for short-haul flights from Italy to other European destinations to one or two rival airlines. Additionally, they will offer these competitors take-off and landing slots at Milan Linate Airport.

Lufthansa €325M ITA Air Takeover : Long-Haul Flight Commitments

For long-haul flights from Italy, the airlines committed to swapping slots or entering into interlining agreements, allowing travelers to connect flights across different carriers.

Conditional Approval and Monitoring

Approval of the Lufthansa €325M ITA Air takeover hinges on the full adherence to these commitments, the commission emphasized. An independent trustee will be appointed to monitor the implementation of these measures.

"At a time when consumers are facing increasingly higher prices for air travel, it is very important to preserve competition in the sector," said Margrethe Vestager, the commission's executive vice president for competition. "We needed to prevent that passengers end up paying more or end up with fewer and lower quality air transport services on certain routes in and out of Italy."

Lufthansa €325M ITA Air Takeover : Stakeholder Responses

Lufthansa and ITA have not yet responded to requests for comment.

Lufthansa AG announced in May 2023 its plan to invest €325 million in ITA for a 41% stake, with the Italian ministry pledging an additional €250 million. However, the commission issued a statement of objections in March, fearing the loss of ITA's independence could harm competition in the market.

Market Impact

The commission's in-depth probe highlighted that the deal might reduce competition on short-haul flights connecting Italy to other European nations and long-haul routes between Italy and destinations like the U.S., Canada, and Japan. Passengers spend over €3 billion annually on these routes, with Lufthansa and ITA currently competing, while other airlines provide insufficient competition.

Lufthansa €325M ITA Air Takeover : Conclusion

The conditional approval of Lufthansa's €325M ITA Air takeover marks a significant step, subject to stringent compliance to ensure competitive market conditions and prevent higher prices or reduced service quality for consumers.