Lufthansa is making further concessions to the European Commission to win EU approval for its planned purchase of a stake in Italian state-owned airline ITA Airways, POLITICO reports.
The offer is aimed at defusing the simmering tensions surrounding a potential EU veto, which Matteo Salvini, Italy’s deputy prime minister, called “a serious attack on Italy, a hostile act” in comments reported by the ANSA news agency last week.
EU and airline officials have focused on long-haul routes to North America, where regulators say they see little competition from other airlines. Lufthansa had previously pledged to address the problem by spinning off part of ITA’s business into a separate company for two years. The Commission asked for a 10-year commitment, according to interlocutors.
Negotiations have focused on how to carve out Lufthansa’s revenue share from its joint venture with United Airlines, where it currently coordinates pricing, capacity and scheduling, said one of the interlocutors, both of whom were granted anonymity to avoid speaking about confidential discussions.
The new proposal is the latest attempt to respond to the commission’s concerns, the second person said, cautioning that they are “not overly optimistic.”
A source told POLITICO on condition of anonymity that the decision has now “become political.”
Vital deal
Italy lobbied hard for the deal. In September, Italian Prime Minister Giorgia Meloni said the Commission was blocking a solution proposed by her government. She said the issue had also been “brought to the attention” of European Economic Commissioner Paolo Gentiloni, an Italian.
Lufthansa chief Carsten Spohr has been pushing hard to get the deal approved, pointing out that many observers believe ITA cannot survive without the deal.
In May, EU antitrust chief Margrethe Vestager warned the companies that officials could not approve the deal “if serious competition issues are not resolved.”
Lufthansa is Europe’s biggest airline by revenue after buying up three smaller European airlines over the past 20 years. That has left a sour legacy. When Brussels Airlines was taken over, there were no takers for Lufthansa’s offer of airport take-off and landing slots.
The Commission has since raised the bar for airline deals, warning that conceding slots is not an effective way to solve problems, especially now that pandemic-hit airlines are reluctant to take on new routes.
