EU anti-trust regulators block Lufthansa's deal with Italy's ITA

EU anti-trust regulators have blocked for now Lufthansa's planned minority stake in the Italian airline ITA Airways after a preliminary investigation showed the deal could reduce competition on some routes, the European Commission said on Tuesday.

The commission said there is only limited competition from other airlines on non-stop routes to and from some Central European destinations.

It noted that on some of these routes, Lufthansa and ITA would be in direct competition with each other with non-stop flights.

There is only limited competition from other airlines - primarily from low-cost airlines such as Ryanair. However, these would often fly from more remote airports.

The EU Commission now has to issue a decision on the procedure by June 6, it said.

Lufthansa said on Tuesday that it is still committed to acquiring a stake in ITA and assumes that the transaction will be approved.

Lufthansa says ITA Airways is to become "a complementary and important part of the Lufthansa Group."

Lufthansa, which says it has the highest sales in Europe, already operates several hubs with the four airlines that currently comprise its network: Lufthansa, Austrian, Swiss and Brussels Airlines.

Lufthansa also said that it was convinced that a stake in ITA would have overall positive effects on competition in Italy and Europe.

ITA was formed in 2020 after a restructuring of the failed Italian flag carrier Alitalia, which the government in Rome took over in March of the same year when various takeover bids failed.

After months of negotiations, Lufthansa agreed with the Italian state last May to take over a minority stake of 41%.

In return, ITA is to receive €325 million ($352 million) in equity from Lufthansa.

According to the agreement, Lufthansa can also acquire a further 49% of ITA shares from 2025 under certain conditions and the remaining 10% at a later date.

Since its announcement, the deal between Lufthansa and the Italian state has been subject to regulatory reviews at the national and European level.

Lufthansa said recently it had already made concessions to EU regulators and that it was was in close dialogue with all parties involved.

Italy's Prime Minister Giorgia Meloni has already put pressure on the EU to quickly agree to the deal. Finance Minister Giancarlo Giorgetti has criticized the lengthy review, decrying "the fact that we are losing more time."

EU competition authorities have started an in-depth investigation into the consequences of the tie-up under competition law.

"The Commission now has 90 working days, until 6 June 2024, to take a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation," the EU Commission said in statement.

ITA - or Italia Trasporto Aereo - took over flight operations of its insolvent predecessor Alitalia in October 2021, but is not its legal successor.

But ITA has secured take-off and landing rights as well as the Alitalia brand. The legendary name could well be reactivated again under the new corporate umbrella.