German airline group, Lufthansa, has made a strategic move to expand its presence in Europe's third-largest aviation market by agreeing to purchase a 41% stake in Italy's ITA Airways. The deal will allow Lufthansa to establish Rome as a key hub for the group, with a particular focus on long-haul traffic, while also giving Rome the opportunity to rid itself of an asset that has been a significant drain on state finances for decades.
The €325 million ($349 million) investment from Lufthansa, alongside an additional €250 million from the Italian government, will enable ITA to expand its fleet from 71 to 94 aircraft by 2027. Furthermore, the company plans to increase its number of employees to 5,500 during the same period. According to a business plan presented by Lufthansa, ITA's revenue is expected to rise to €4.1 billion in 2027 from an estimated €2.5 billion this year.
The acquisition of ITA further consolidates the European aviation market, which is now primarily controlled by three main airline groups: Lufthansa, Air France-KLM, and IAG SA (the parent company of British Airways and Iberia), alongside several low-cost carriers such as Ryanair, EasyJet, and Wizz Air. A few airlines, such as Portugal's TAP and Scandinavia's SAS AB, remain independent.
The deal is expected to face significant antitrust scrutiny from European Commission officials in Brussels. CFO of Lufthansa, Remco Steenbergen, commented that it would take some time to make ITA successful in the increasingly competitive Italian market, which has seen significant expansion from low-cost competitors in recent years.
By acquiring ITA, Lufthansa can optimize flight schedules on European routes, boost yields, and expand its range of flag carriers to include Italian airline services. The deal also supports Lufthansa's multi-hub strategy, aimed at establishing Rome as a significant hub for the company.