In the bidding contest to take over state-owned Italian ITA Airways, Lufthansa has only come second. Instead, the Italian Ministry of Finance and Economy decided to start exclusive negotiations with U.S. investor, Certares. The fund is backed by the airline alliance AirFrance-KLM and Delta Airlines.
Instead of being annoyed by the decision in favor of Certares, Lufthansa and partner MSC should send Italian Finance Minister Daniele Franco a case of champagne to his official residence in the Palazzo delle Finanze in Rome and express their thanks for his Certares preference. Why? Because what initially looked like a defeat turns out to be a stroke of good fortune for the two bidding partners.
Why Signore Franco chose the U.S. fund as preferred bidder becomes clear when taking a closer look at the terms offered by the financial investor. Certares is willing to settle for a slim
majority of 51% in ITA. In addition, the fund offers the government two seats on the future five-member board of directors. And the cherry on the bidding cake is that the Ministry will be allowed
to appoint the Chairman of the Board of Directors.
In contrast, Lufthansa / MSC wanted to acquire 80% in ITA, and not let the state interfere in their business decisions.

Anticipatory obedience
On 25SEP22, Italians will elect a new government. Current polls say that the hot candidates to win the contest are either aging populist Silvio Berlusconi or neo-fascist Georgia Meloni.
In an act of anticipatory obedience, the Treasury's vote in favor of Certares already anticipates the expected outcome of the election. In her campaign, Ms. Meloni had trumpeted that, under her
political guidance, there would be no sell-off of Italian companies to foreign investors. Therefore, the two seats on the supervisory board conceded by Certares, coupled with the offer to the
government to appoint the Chairman of the Board, can be “sold” to Italian right wingers and the broad public as a much more favorable, “national” solution compared to the takeover of 80% of ITA
as intended by Lufthansa and MSC.
(State) business as usual
Whether this is also the better solution remains to be seen. ITA's market share in Italy has steadily declined since its first flight on 02DEC21, with Pope Francis on board, and currently stands
at 3.9%. In addition, according to local media, the newcomer has accumulated more than 500 million euros in debt since then. Investor Certares will now have to take over these liabilities, as the
EU will block further state subsidies due to competition reasons.
Hence, Italian politics carries on as before. State officials will have the last say in controversial ITA issues, as practiced for decades with Alitalia. Ecco!
The outcome is known.
Therefore, should Berlusconi or Meloni take a leading position in the next government, which current polls suggest, Lufthansa and MSC can only be congratulated for having lost the bidding
contest.
Heiner Siegmund
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