Lufthansa’s Investment in ITA Airways Put on Hold Over Price Dispute

Updated: November 5, 2024, 3:28pm CST

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Why Lufthansa and the Italian Goverment Are Arguing
Why This Matters for U.S. Flyers
Final Thoughts

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The agreement between Lufthansa and the Italian government for the purchase of 41% of ITA Airways is on hold because the two parties cannot agree on the final price.

The spat is jeopardizing a deal that would take the Italian flag carrier out of the SkyTeam alliance and put it in Lufthansa’s Miles & More loyalty ecosystem instead — part of the Star Alliance.

Here’s what we know about this latest snag in the long negotiation to sell a stake in the Italian flag carrier.

Why Lufthansa and the Italian Goverment Are Arguing

ITA Airways is the successor to bankrupt Alitalia, which was liquidated in 2020. It is owned by the Italian government through the Ministry of Economy and Finance.

Lufthansa had agreed to buy 41% of ITA Airways. Earlier this year, the European Union’s regulatory authorities approved the acquisition. Lufthansa would pay €325 million (over $350 million) for the stake by taking part in a capital increase.

Italian newspaper Corriere della Sera reported on Tuesday that the parties are now disagreeing on that price. Citing sources close to the negotiation, the paper said that Lufthansa wanted a discount of €10 million (nearly $11 million) because, by the time the deal would close later this year, ITA Airways is expected to have lost value.

ITA disembarking in Rome GRU FCO — Deplaning from an ITA Airways plane in Rome. Image Credit: Ryan Smith

The Italian side replied that all airlines post relatively bad numbers in the last quarter of the year and that, therefore, the government would not accept price adjustments based on that performance.

Lufthansa sent a statement to Corriere della Sera denying that there is a disagreement on price.

Bottom Line:

Sources not authorized to speak openly were cited (anonymously) about these details, saying there’s a disagreement on €10 million that’s holding up the purchase of 41% of ITA by Lufthansa.

Why This Matters for U.S. Flyers

ITA Airways serves the U.S. with flights from its Rome (FCO) hub to Boston (BOS), New York (JFK), Washington (IAD), Chicago (ORD), Miami (MIA), San Francisco (SFO), and Los Angeles (LAX).

Currently, ITA is a member of the SkyTeam alliance, meaning that it’s in the same ecosystem as Delta Air Lines, Air France, KLM, and Virgin Atlantic, among others. A member of Delta’s SkyMiles loyalty program can earn miles and Medallion Qualifying Dollars (MQDs) on ITA Airways flights, for example, according to Delta’s partner earnings chart.

An investment by Lufthansa in ITA Airways would mean ITA’s exit from SkyTeam and its inclusion in the loyalty program of the Lufthansa Group, Miles & More. It would also mean that ITA Airways flights could be booked using United Airlines MileagePlus miles, as is the case with other carriers affiliated with Lufthansa — which is a member of Star Alliance like United.

Final Thoughts

The acquisition of a large stake in Italian flag carrier ITA Airways by German airline Lufthansa is in jeopardy. That’s because the Italian government, which owns ITA, and Lufthansa are fighting over the price, even though the deal had already been approved by the European Union.

This matters for U.S.-based passengers because a deal with Lufthansa would take ITA Airways out of the SkyTeam alliance, where Delta Air Lines is. The Italian airline would become closer to Star Alliance, which United Airlines is a member of.