from markets to connections «that's why we focus on Italy» -

from markets to connections «that's why we focus on Italy» -

A win-win strategy for Germany and Italy. That would allow the group to expand its footprint in Europe and help Ita Airways secure a future in a solid home. In the days when negotiations with the Treasury for a minority investment by Lufthansa are coming to life, the European giant of the skies officially explains (even to its over 110,000 employees) why the move on the Italian airline makes sense from an industrial.

The negotiations

In the bulletin in English and German two pages - out of nine - are dedicated to the exclusive negotiations between Lufthansa and the Italian Ministry of Economy. The group intends to first enter with a minority stake - around 40% -, then rise to 100% when the Italian company has stopped losing money. At the moment, explains the group, negotiations are underway regarding the possible form of the participation, the commercial and operational integration of ITA in Lufthansa and the synergies that will derive from it.

The extract on Ita of the bulletin of the Lufthansa group

The Italian market

Traditionally, Italy has always exerted a strong attraction on private travelers from all over the world, we read. At the same time, its heavily export-oriented economy makes it a major business travel destination. Reason why the Italian airline, which has undergone a major restructuring and which operates from its hub in Rome (Fiumicino, ed), fits perfectly into the route network of the Lufthansa Group.

The knot of dimensions

In a passage of the disclosure Lufthansa tries to answer the doubts. Skeptics fear too much complexity in another investment/acquisition, it reads. But we have already demonstrated how this can be successfully implemented with the acquisitions of Swiss, Edelweiss, Austrian Airlines, Brussels Airlines and Air Dolomiti. The intention on Ita plays a strategic role: To be successful on a global level, size is fundamental. With its 11 airlines Lufthansa is the fourth group in the world in terms of turnover after the three Americans (American Airlines, Delta Air Lines, United Airlines).

The multi-brand strategy

But the only major airline of the group, Lufthansa Airline, not even in the top ten international competitors. This is why carriers in Austria (Austrian Airlines), Belgium (Brussels Airlines) and Switzerland (Swiss, Edelweiss) are strengthening Lufthansa and vice versa by offering high route flexibility and less dependence on individual hubs. Crucial to the success of this multi-brand strategy is that each brand is autonomous and has a specific profile, it is explained. Each company is run by local management and caters to customers in local markets.

The placements

In the document, the group summarizes the various positions. Lufthansa and Swiss are the premium carriers. Austrian Airlines and Brussels Airlines combine high-quality and low-cost offerings to compete even with low-cost carriers in their home markets. CityLine, the regional division of Lufthansa, serves the "feeder" routes on Frankfurt and Munich as well as the shorter European ones. Eurowings and Eurowings Discover target the tourist segment. Edelweiss supports the services offered in the Zurich hub. Italy's Air Dolomiti serves the Northern Italy market through its hub in Munich.

The future of Ita

The Germans do not reveal the papers on Ita's whereabouts and underline that as a member of the family he will provide Italy with a series of international connections. Experts argue that at first, and given the losses of recent months, Ita should hardly be placed in the premium segment right from the start, and for this reason it is more probable that it will be halfway between Lufthansa-Swiss (the latter closed 2022 with a positive operating result of 476 million euros) and Austrian Airlines-Brussels Airlines or together with the latter two.

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