Lufthansa gets EU warning shot over E325m ITA deal
Deutsche Lufthansa’s E325m investment in Italian carrier ITA Airways faces a potential veto from European Union merger watchdogs unless it fixes a list of competition concerns handed down by regulators. The EC said Monday in a so-called statement of objections it has concerns the deal could hamper competition on routes connecting Italy with central European countries, as well as flights between Italy and the US, Canada and Japan. The Brussels-based watchdog said the combination could also strengthen ITA’s dominant position at the Milan-Linate airport. Lufthansa and ITA Airways can now respond to the EU’s concerns with an offer to remedy the anticompetitive risks. The regulator has until June 6 to come to a final decision. Aside from warning about possible reasons for a veto, EU statements of objections 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. “We will shortly submit a concept for remedies to the authority in order to address any remaining concerns,” Lufthansa said in an emailed statement. “We are ready to constructively find solutions that are compatible with the economic reality of a highly competitive Italian aviation market and remain confident that ITA will become part of the Lufthansa Group family before the end of this year.” The EU has increasingly been on the lookout for more robust airline concessions. A recent EU approval of Korean Air Lines’ 1.8t won bid for smaller rival Asiana Airlines involved remedies that included the divestment of Asiana’s cargo business, as well as a commitment to allow rival airline T’Way to provide flights on routes between Seoul and Barcelona, Paris, Frankfurt, and Rome. Under the terms of the Lufthansa deal with ITA Airways, Cologne-based airline 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 Italian carrier, which officially ceased operations in 2021.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2024-03-26/star/lufthansa-gets-eu-warning-shot-over-e325m-ita-deal
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Lufthansa gets EU warning shot over E325m ITA deal
Deutsche Lufthansa’s E325m investment in Italian carrier ITA Airways faces a potential veto from European Union merger watchdogs unless it fixes a list of competition concerns handed down by regulators. The EC said Monday in a so-called statement of objections it has concerns the deal could hamper competition on routes connecting Italy with central European countries, as well as flights between Italy and the US, Canada and Japan. The Brussels-based watchdog said the combination could also strengthen ITA’s dominant position at the Milan-Linate airport. Lufthansa and ITA Airways can now respond to the EU’s concerns with an offer to remedy the anticompetitive risks. The regulator has until June 6 to come to a final decision. Aside from warning about possible reasons for a veto, EU statements of objections 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. “We will shortly submit a concept for remedies to the authority in order to address any remaining concerns,” Lufthansa said in an emailed statement. “We are ready to constructively find solutions that are compatible with the economic reality of a highly competitive Italian aviation market and remain confident that ITA will become part of the Lufthansa Group family before the end of this year.” The EU has increasingly been on the lookout for more robust airline concessions. A recent EU approval of Korean Air Lines’ 1.8t won bid for smaller rival Asiana Airlines involved remedies that included the divestment of Asiana’s cargo business, as well as a commitment to allow rival airline T’Way to provide flights on routes between Seoul and Barcelona, Paris, Frankfurt, and Rome. Under the terms of the Lufthansa deal with ITA Airways, Cologne-based airline 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 Italian carrier, which officially ceased operations in 2021.<br/>
