Lufthansa ups its offer to try to win over EU on ITA deal
3122 Mins Read
Lufthansa is making extra concessions to the European Commission to try to win European Union approval for its planned stake in Italy’s state-owned ITA Airways, two people said Monday.
The offer aims to diffuse a simmering row over a potential EU veto that Matteo Salvini, Italy’s deputy prime minister, labeled as a “serious attack on Italy, a hostile act,” in comments reported by news agency ANSA last week.
EU officials and the airlines have been focusing on long-haul routes to North America where regulators have said that they don’t see sufficient rivalry from other airlines. Lufthansa previously committed to tackle that by holding part of ITA’s business separate for two years. The Commission had asked for a 10-year pledge, the two people said.
Talks have centered on how to carve out Lufthansa’s revenue share from its joint venture with United Airlines, where it currently coordinates on price, capacity and scheduling, said one of the people, both of whom were granted anonymity to speak about confidential discussions.
The new offer is the last attempt to answer the Commission’s concerns, said the second person, who warned that they were “not too optimistic.”
Both people said that the decision now “has become political.”
Italy has lobbied hard for the deal to be cleared with Italian Prime Minister Giorgia Meloni saying in September that the Commission was blocking the solution her government had put forward. She said the issue was also “brought to the attention” of European Economy Commissioner Paolo Gentiloni, an Italian.
Lufthansa chief Carsten Spohr has been pushing hard to get the deal approved, pointing out that many observers think ITA cannot survive without the deal.
EU competition chief Margrethe Vestager warned the firms in May that officials could not clear the deal “if serious competition issues cannot be solved.”
Lufthansa is Europe’s biggest airline by revenue after buying up three smaller European airlines over the past 20 years. This has left a sour legacy. In the Brussels Airlines takeover, there were no takers for Lufthansa’s offer of airport takeoff and landing slots.
The Commission has since raised the bar on airline deals, warning that ceding slots isn’t an effective way of tackling problems especially now that pandemic-hit airlines are reluctant to enter new routes.
