immediately 40% of the company and the way to synergies with the European group – Corriere.it

Lufthansa is preparing to send its offer for Ita Airways to the Ministry of Economy. The Germans will propose to immediately buy 40% of the airline, also booking the other 60% to be acquired in the medium term and upon the occurrence of certain conditions. The objective of the European group to have 100% of the Italian carrier in 3-5 years. what he learns the Corriere della Sera from two government sources who requested anonymity because they are not authorized to speak about it with the press. Lufthansa, the Mef and Ita do not comment.

The stages

The move, the sources continue, is expected in the next few days, probably on Christmas Eve, even if there is no fixed deadline, to then aim for the signing of an initial agreement at the end of the year and start the process that will lead to the necessary authorizations from part of the control bodies (such as the EU Antitrust) and at the closing between May and June. Barring hitches. In the meantime, as early as January, Lufthansa would like to start interventions to put Ita’s accounts in order by exploiting as soon as possible the synergies that only a large group can provide, stimulating revenues and limiting operating costs. Following a path already tested in the continental federation of skies: in fact, the Lufthansa group also includes the Swiss Swiss, the Austrian Austrian Airlines, the Belgian Brussels Airlines, the Italian Air Dolomiti and the German-Maltese Eurowings.

The reassurances

On Friday 16 December, the German managers held the last technical session with colleagues from Ita, addressing the commercial aspects and trying to imagine the operational steps in view of the joint activities. Next week – after a political confrontation with the Treasury – Lufthansa should officially come forward to buy 40%. But in Frankfurt they know that political instability and the anti-sale front are unknowns that cannot be ignored in this dossier. For this they are asking the Italian executive for precise guarantees to be included in an agreement – armored with millionaire penalties – which clearly defines the governance, which provides for precise stages in the coming months and which entrusts the management of the airline to Lufthansa.

The price

At the moment, it is not clear what the value of the initial transaction will be: the figure is around 180-200 million euros for that 40%, but it is probable that Lufthansa will pay a first tranche of 100 million, tying the second part to compliance with certain requirements. The Germans explained to the Italian interlocutors that the European group would like to start by exploiting the commercial, financial and industrial synergies provided by the group: the sale of Ita tickets and purchases, for example, would be included in the platform used by the airlines of the European agglomeration to increase revenues per passenger, better distribute your product (making the most of the network of connections) and have important discounts when it comes to buying the materials necessary for the activities.

The integration

60% would be the subject of a call option which recognizes Lufthansa’s right to buy the remainder from the MEF. For this reason it would, technically, still be a real privatization for the Germans because it would pave the way to having 100% of Ita. The Mef-Lufthansa agreement, in addition to setting dates and quotas, will leave margins on the price of the exchanged packages because in the meantime – if the Lufthansa cure works – that 60% in the hands of the State could register an increase in value. In the event of a positive outcome of the negotiations, the Italian company would migrate to another alliance, Star Alliance, and would have a privileged relationship with A++, Lufthansa’s transatlantic joint venture with United Airlines and Air Canada to better share routes, passengers and market revenues between Europe and North America.

Lufthansa financial statements

The plans for Ita come to terms with a much improved financial environment for Lufthansa. The group revises its adjusted Ebit upwards by 50% for 2022 and expects to close with +1.5 billion (against one billion a few months ago). The result – he explained in a note – linked to the performance of earnings in October and November that exceeded expectations and the strong demand for travel. Not only. The Cargo and Technik (maintenance) divisions should achieve record results, while as far as bookings are concerned, the positive trend will continue in the coming months.