Lufthansa faces EU warning shot over $350m ITA deal

Deutsche Lufthansa AG’s E325m investment in Italian carrier ITA Airways is under threat from European Union merger watchdogs unless it fixes a list of competition concerns set to be handed down by regulators. The European Commission is gearing up to issue a so-called statement of objections cataloging certain risks arising from the deal, according to people familiar with the matter. The formal warning — increasingly common in complex or potentially troublesome transactions — could come before the authority’s Easter break in late March, said the people, who asked not to be named because the process isn’t public. Aside from warning about possible reasons for a veto, such filings typically flag potential ways forward to avoid such a scenario. In airline deals, this can include a remedy to share or give up routes to rival airlines, as well as a potential divestment of assets. Under the terms of the rescue plan, Cologne-based Lufthansa would initially buy 41% of the successor to failed flagship Alitalia from the Italian state, with an option to acquire the rest later. The transaction marks the latest attempt to resurrect the ailing Italian carrier, which officially ceased operations in 2021. A scaled-back version remained under government ownership and has soaked up billions of euros in state support since then.<br/>