Negotiations between Lufthansa (LH) and Italy’s Ministry of Economy and Finance (MEF) over the Lufthansa ITA takeover have been delayed due to an ongoing ITA purchase price dispute. Despite Lufthansa’s insistence on adjusting the terms, the Italian government has refused to accept a price reduction. This pricing issue has stalled the Lufthansa Italy airline deal and puts the entire transaction at risk.
In March, the European Commission expressed concerns over reduced competition if the deal proceeded as planned, particularly on routes connecting Italy to major global markets. The Commission raised alarms that the ITA acquisition by Lufthansa could lead to higher fares and fewer passenger choices on certain routes, notably from Milan Linate Airport to North America and Japan.
Lufthansa ITA Negotiations at a Crossroads
The Lufthansa ITA negotiations had made significant progress, with the European Commission approving the deal under certain conditions, such as Lufthansa ceding flight slots to competitors. Lufthansa had agreed to pay €325 million (US $354 million) for a 41% stake in ITA, with future payments contingent on ITA’s performance.
Despite securing initial approval, the final terms, including the remedies package required by the Commission, were not submitted as scheduled due to the ITA purchase price dispute.
The Italian government airline sale has now hit a critical point, with both sides needing to reach an agreement by November 11 to avoid restarting the approval process. Lufthansa remains committed to the original deal terms. However, the Italian government is determined to uphold ITA’s value, potentially delaying or even canceling the deal altogether.
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