Lufthansa slated to boost EU offer to save €325 million ITA deal

Deutsche Lufthansa AG is expected to submit a fresh round of concessions to European Union regulators over its planned €325 million ($348 million) investment in Italian carrier ITA Airways after an earlier offer failed to allay competition concerns.

The move, signaled by the Italian government after a meeting between Finance Minister Giancarlo Giorgetti and EU Competition Commissioner Margrethe Vestager in Brussels, will improve on April 11 commitments described at the time by Lufthansa as “a comprehensive, constructive solution” to appease regulators.

“The parties will submit, in due course, certain additional remedies to address the concerns raised by the commission, including the issue of certain routes,” Italy’s Finance Ministry said without giving further details.

The previous offer — deemed inadequate — involved sharing flight routes with rivals out of Rome and Milan Linate airports, as well as giving up slots on eight European routes, according to people familiar with the situation who spoke on condition of anonymity. These routes were largely from Milan and Rome and cities in Germany and Switzerland. The concessions also involved the freezing of minimum passenger capacities on flights to the US, Canada, and Japan. The offer was designed to appease EU concerns over Lufthansa having an increased incentive to raise ticket prices on those routes.

The people added that while June 6 is the official deadline for regulators to sign off on the deal, there is a likelihood of the review deadline being extended as Lufthansa prepares a revised remedy package. The EU’s pressure for Lufthansa to offer more concessions comes after it formally warned in March that it could block the deal unless the firm made an offer to fix its anticompetitive concerns.

Lufthansa and the European Commission declined to comment. 

Under the terms of the deal with ITA Airways, Cologne-based Lufthansa would initially buy 41% of the successor to failed flagship Alitalia from the Italian state, with an option to acquire the rest later. The transaction marks the latest attempt to resurrect the Italian carrier, which officially ceased operations in 2021.