Not just the sale of ITA to Lufthansa, Air France and others: the big maneuvers in European skies

European air transport is experiencing feverish years with numerous processes of acquisitions and mergers that are consolidating the entire industry. A useful and irreversible process, in some ways, that should stabilize a market that is still too fragmented.

Compared to Europe, in fact, in the United States the 75% market share has long been controlled by only 4 carriers: the three sister American, Delta, United and Southwest Airlines.

With the upcoming acquisition of Ita Airways by Lufthansa Group (and the Iberia-Air Europa merger in Spain) in Europe, too, we are marching swiftly toward a market controlled by 5-6 airline groups.

In addition to Lufthansa, the European leaders are. Ryanair, the holding company Iag (British-Iberia), Air France-Klm, and Turkish Airlines, but the low-cost sector has seen the exponential growth of Wizz Air and the decline of easyJet.

It is not certain, however, that over the next few years there will be further market movements that will narrow the small group of big players even more.

Ryanair accelerates, Lufthansa chases

As is well known, the leader in Europe is increasingly Ryanair, which benefited from the crisis in the legacy sector during the post-Covid restart to expand its continental growth.

In fact, during 2022, the Irish airline. carried about 160 million passengers, detaching the very Lufthansa Group that reached 102 million passengers carried.

At third place in this special ranking is Iag (which includes Iberia-British Airways, aer Lingus, Veuling, and Level) with 104 million passengers. Fourth place is held by Air France-Klm Group with 83.3 million passengers, while Turkish recorded 71.8 million and easyJet stopped at 69.2 million.

In seventh place ticks right off Wizz Air with about 46 million of pax: the low-cost carrier undermined Russian group Aeroflot over 2019 for obvious reasons. On the one hand, the war with Ukraine and the ban on flights penalized Aeroflot; on the other hand, Wizz Air has increased its capacity over the past three years.

How the big player landscape is changing

Ryanair continues to grow organically, i.e., without direct acquisitions (with the exception of Lauda Air in 2018), but with the creation of two in-house airlines, Buzz and Malta Air, which are useful more for tax and contractual benefits than instead for a brand or hub issue.

The other large Groups, however, have chosen to increase their market shares by working on acquisitions and mergers. Each Group, moreover, refers to the three major international alliances: Lufthansa for Star Alliance, Air France-Klm for Skyteam, Iag for oneworld.

The Lufthansa-Ita Airways Marriage.

The strategy of the Lufthansa Group (which in addition to LH includes Swiss Air, Eurowings, Austrian Airlines, and Brussels Airlines) was precisely to incorporate the carriers that most adhered to a model of Multi-hub expansion in central Europe which served the most profitable markets, while concentrating the bulk of operations on the two German bases in Frankfurt and Munich.

In fact, Lufthansa has always taken over ailing airlines and succeeded in getting them back on track with painstaking operations and a defined network. This is the case with both Swiss Air both of Austrian - shining in financial and capacity results-while Brussels Airlines and the "home-grown" Eurowings continue to weigh down the Group's accounts and search for their own identity.

With the entry of Ita Airways-which carried more than 10 million passengers in 2022-Lufthansa wants to secure a hub in the Mediterranean (Rome Fiumicino) that could increase the German Group's ambitions with respect to international flights to North and South America and to Africa.

In addition, Ita Airways could aim to at least be the she second carrier of the Group German by number of passengers. In 2019, in fact, the old Alitalia (from which Ita Airways inherited planes, network, routes, staff, etc...) had reached 21 million passengers.

The Iag-Air Europe Transaction

As for the Anglo-Spanish holding company Iag, on the other hand, after more than three years of negotiations, positively the agreement with the Globalia Group for the acquisition of Air Europa's 100%.

Spanish airline becomes Iag's sixth carrier - after British Airways, Iberia, Vueling, Aer Lingus and Level - and will bring in about 13 million passengers (2019 figures, but last year the carrier is expected to have performed in line with pre Covid numbers).

Iag has promised to keep Air Europa's name and brand alive, integrating operations with Iberia and enhancing the role on the Madrid Barajas hub. The goal is to become an increasing leader on the network of connections between Europe and South America-Caribbean; as well as more opportunities toward Asia.

Air France-Klm toward the acquisition of Tap?

Europe's other major Group, Air France-Klm, after seeing the opportunity for an increasingly strong partnership with Ita Airways fade away is now reportedly setting its sights on acquiring the airline Tap Air Portugal.

With the recent announcement of the full reimbursement of the support it received from the French state during the pandemic period, the French-Dutch outfit is now free from the existing "restrictions" on Covid state aid, and will be able to try to buy Portuguese airline returned to state hands during the pandemic and officially put up for sale in recent months.

Air France-Klm has on several occasions expressed interest in expanding its perimeter in Europe, and Tap s entry into theAre strategic for routes to Brazil. - and subsequent connections to other Latin American destinations - and Africa; as well as the creation of a third European hub in Lisbon, in addition to Paris and Amsterdam.

The future of low-cost airlines

But consolidation is not just a prerogative of the legacy sector. In fact, a possible agglomeration in the low-cost terrain has been on the horizon for some time, which would allow for the creation of a real competitor to Queen Ryanair.

In September 2021, in fact, the British airline easyJet. Has rejected the purchase proposal of the 100% formulated by the Hungarian Wizz Air. If the operation had gone through, we would have seen the emergence of the second or third largest hub in Europe with a potential of more than 100 million passengers.

At the moment there do not appear to be any further negotiations underway, but the acceleration imposed by the Lufthansa, Iag, Air France-Klm trio could provoke further movement. Not excluding possible and new twists and turns.

Lufthansa, in fact seems the most active in the market: in addition to Ita Airways, the German giant has not ruled out any new acquisitions ranging from Tap Air Portugal itself to Lot or Aegean, even going as far as Volotea.

In fact, the Spanish airline recently entered into a codeshare mega-agreement with Lh's low-cost rib, Eurowings. According to those involved, this would by no means be the first step to further integration, but in European air transport strategies anything is possible.

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