Lufthansa Group has secured approval from the European Commission for its proposed progressive acquisition of ITA Airways after agreeing concessions to satisfy the regulator’s competition concerns over the tie-up.

The conditions will address Commission fears over the competition impact of the tie-up on short-haul routes to Central Europe; the giving up of slots at Milan Linate airport; and also implementing measures to support rival services on transatlantic routes.

ITA Airways A320neo

Source: ITA Airways

ITA Airways carried out its maiden Airbus A320neo flight on 20 February 2023

Implementation of the deal remains conditional on the Commission approving “suitable remedy-takers” addressing each of these concerns. ”The Commission will assess the suitability of remedy takers in the context of a separate buyer approval procedure,” it says.

It follows an in-depth probe by the Commission into the deal, agreed in May 2023, under which Lufthansa will initially take a 41% stake in ITA but also holds an option to take full control of the Italian airline at a later date.

Specifically Lufthansa and the Italian finance ministry have committed to make available “the necessary assets” to one or two rival airlines to enable them to start nonstop flights on short-haul routes from Rome or Milan to certain Central European airports.

Any operator picking up the routes would need to operate them for an unspecified minimum period and one of these carriers would be given access to ITA’s domestic network to offer indirect connections between certain airports in Central Europe and certain Italian cities beyond Rome and Milan.

The German airline group and finance ministry have also agreed to to transfer take-off and landing slots at Milan’s downtown, slot-constrained Linate airport for remedy-takers to operate short-haul routes.

”The number of slots to be divested exceeds what is necessary to operate the short-haul routes as well as the number of slots that the transaction would have added to ITA’s portfolio,” the Commission says. ”This will allow the remedy-taker to establish a sustainable base at Linate airport and to potentially offer its own one-stop connections between Italy and Central Europe.”

The Commission had also flagged concerns about the impact on competition on long-haul routes, where Lufthansa has a joint venture on North American services with Air Canada and United Airlines.

”The merged company will enter into agreements with rivals to improve their competitiveness on the long-haul routes of concern, for instance through interlining agreements or slot swaps. This will lead to increased frequencies of nonstop flights and/or improved connections for one-stop flights on each of the routes,” it says.

”In its assessment, the Commission took into account the fact that the ministry of economy and finance will retain a controlling stake in ITA after the transaction and will continue to have incentives to have ITA compete against Lufthansa’s joint venture partners in North America, at least until ITA is integrated into the joint venture.”