Lufthansa-Ita Airways marriage, German strategy for takeoff in early 2024

The record-breaking summer of the Lufthansa Group and the sale of LSG catering services by the German giant are pushing hard toward the acquisition of the 41% by Ita Airways.

Not least because it is Lufthansa itself that is giving up all delay and confirming in an official note that by early 2024 it will arrive the okay of the EU antitrust. On joining the tricolor airline.

Lufthansa's optimism

Indeed, the German group, on the sidelines of its press release on quarterly results, confirms how it is "seeking approval from the European Commission for the agreed acquisition of a share of Ita Airways' 41% by early 2024″.

Lufthansa has put pen to paper on the prospect of tying the knot with Ita, thus banishing specters that saw a further halt to negotiations due to the protectionist thrusts of the Italian government and the many stakes Brussels would like to impose on the acquisition path.

Antitrust requests

In the meantime, however, the German giant will have to sacrifice some long-haul slots just to cash in on the European green light. The negotiations concern the routes to North America and Asia, which are also the most profitable for Lufthansa.

Connections from the hubs of Monaco e Frankfurt to major destinations in Canada, the U.S., Mexico, China, and Japan constitute a decisive market share for LH, even in view of the high load factor ratios and margins the Group has been posting in recent months.

The other hurdle that Lufthansa intends to overcome without losing too much market is the one related to the six routes that, as a result of the nuptials, would become de facto Luftansa/Ita-branded monopolies: those between Milan, Frankfurt, Dusseldorf and Stuttgart and those between Rome, Frankfurt, Munich and Zurich.

The record-breaking summer and the sale of LSG

Helping the deal financially, then, are the very financial results of LH, which "in the third quarter made further progress in its transformation into a global airline group."

La sale of the LSG Group - the catering company that supplies numerous airlines in addition to German airlines-to the private equity firm Aurelius, announced in April, was in fact completed on Oct. 31, 2023.

The review of the sale of a minority stake in Lufthansa Technik should also be completed by the end of the year.

Lufthansa estimates that demand for air travel will remain strong in the coming months. The big summer surge extended into October, and demand during the Christmas period is strong.

In this context, LH reports how the upward trend in bookings in the premium classes, that is. Business Class or First Class, continues for the next few months. The Group plans to increase its capacity in the fourth and final quarter of the year to about 91% over 2019 levels.

Finally, for 2024, the German colosos continue to forecast an increase in capacity to 95% of pre-covid levels.

I passengers carried in the third quarter (July-September 2023) were 38 million, with revenues up 8% to 10.3 billion, marking the best quarter ever in terms of revenues. Net income was up to 1.2 billion over the same period last year (+47%) and adjusted Ebit was 1.46 billion (+31%).

"All the airlines in our group and Lufthansa Technik contributed to this result with double-digit profit margins," commented CEO Carsten Spohr - Although the geopolitical situation remains difficult, our outlook for reservations gives us reason to be positive, not only for a very good group performance this year, but also for the future."

Between January and September this year the passengers were 93.193 million, 23% more than the 75.72 million in the first nine months of last year.

The treasury for the future

Sharply improved accounts, then, replenishing Lufthansa's coffers. A treasury that serves not only to make up for losses incurred during the pandemic, but to planning the necessary investments in Ita Airways thus balancing the future damage from the necessary divestment of some strategic slots.

We will see whether this strategy will be enough to convince the European Union and to kick off the new German era of Ita Airways.