Surprising decision in Rome: The Italian Ministry of Finance has decided in favor of investor Certares as the preferred bidder to take over ITA Airways. Previously, the Italian Ministry of Economy had supported the joint bid by Lufthansa and shipping company, MSC, to purchase the majority stake in Alitalia successor, ITA Airways. For Lufthansa, the decision is a bitter setback in its efforts to establish an own airline in Italy.
In Paris, Amsterdam, and Atlanta, the headquarters of Air France, KLM, and Delta Airlines, the champagne corks are likely to pop today (31AUG22), following the decision of the Italian Finance
Ministry in favor of bidder Certares. However, whether this will also be the case at ITA's headquarters in Rome is doubtful. Months ago, the airline had loudly favored a merger with
Lufthansa/MSC, and opted against the takeover by investor Certares, which is backed by the three airlines just mentioned.
Decision driven by politics
The determining factor for the decision of the Finance Ministry was probably that Certares had submitted an offer to buy 51% of state-owned ITA. In contrast, Lufthansa and MSC wanted to acquire up to 80% of the capital shares. At the same time, both had announced their intention to concentrate ITA’s operation at Rome Fiumicino, making it its hub and transit point for the Star Alliance. Air France -KLM - Delta, on the other hand, want to concentrate their traffic, including that of ITA, in Milan Malpensa, the economically much stronger region in comparison.
Local market observers suspect that the decision in favor of Certares is also based on political considerations. For example, early national elections will be held on 25SEP22, following the resignation of Prime Minister Mario Draghi on 21JUL22. In the polls so far, populist Georgia Meloni of the right-wing Fratelli d'Italia party leads the list of potential successors. And she recently declared that under her leadership, no more state-owned companies would be sold to foreign investors.
The deal is not inked yet
This is likely to be election campaign bluster, but the sale of “only” 55% of the state-owned ITA sounds less dramatic than selling 80%, so it is likely to be more palatable for the nationalists around Ms. Meloni. However, without the backing of a financially strong investor, ITA has no future. The airline has been accumulating losses since day one of its existence.
Whether Certares will be the ultimate winner remains to be seen. Next, exclusive negotiations between the preferred bidder and the Ministry of Finance are to follow. And only if the parties involved reach a final agreement, will ITA become part of the alliance of Delta, Air France, and KLM.
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