The Ita-Lufthansa agreement risks falling apart, due to Brussels

It is the decisive week for the wedding between Ita and Lufthansa. The negotiations continue and the dossier with the agreement continues to travel between Brussels, Rome and Frankfurt, with continuous stops and delays. But it is a race against time and if the European Union does not give the green light, the risk is greater for the Italian company which owns 100% of the Treasury. But there's still time.

In January the European antitrust put the Italian-German agreement on standby, requesting “corrective measures” to safeguard competition rules. On May 6, the proposals studied by Rome and Frankfurt on the Linate airport, on the short-haul routes from Italy to Europe and on the long-haul routes from Fiumicino to the United States and Canada arrived in Brussels. But they weren't enough. They were considered insufficient. And so a new package is expected within the next few hours, with the requested changes. Meanwhile, the European Commission is engaged in the market test (the market simulation to evaluate the impact of the proposals on the balance of competition in European skies) which should end today. But without the expected improvements, the no to the wedding remains concrete in the air . The final verdict is expected by July 4.

Europe is asking to give up many more slots than Linate: 30% against the 11/12% proposed by Ita and Lufthansa. And there would be an opening on this. But the real issue, what seems to put the outcome of July at greatest risk, is on long-haul routes. Here are also the American partners of the German company, namely United Airlines and Air Canada, which would have to give up part of the profits on US-Europe flights. Of course, Rome and Frankfurt can decide to give up on the Linate slots, sacrificing 175 million euros in revenues, i.e. over 100 million more than the measures sent on 6 May. But it is much more complicated to expect Americans to give up earnings to save a wedding in which they are not participating as investors. So is the outcome of the operation being placed in the hands of “third parties”?

It is still a question and there is still time, but Brussels' continued request for sacrifices and economically onerous conditions could lead Lufthansa to withdraw from the agreement which provides 325 million euros for 41% of the capital. This or the European Union's rejection of the agreement would open up a very dark future for Ita. As Ryanair chief executive Michael O'Leary put it, “it will go bankrupt and disappear”. Ita closed 2023 almost breaking even, while all European companies recorded high profits. A net loss of 5 million, a sort of miracle (thanks also to the expensive tickets of the last year) if you think of the over 480 million of the previous year. Almost 5 thousand employees and 85 aircraft, for the whole of 2025 the Mef, after the recapitalization of 1.35 billion authorized by Brussels, can no longer pay a single euro. Lufthansa's 325 million are really useful. Also because in the medium and long term Ita will be faced with heavy outlays, especially to pay for the new Airbuses already purchased. There could be cash problems starting in the autumn, not only if Brussels says no, but also if the decision is postponed further.

The alliance with Lufthansa is the lifeline for the company born from the ashes of Alitalia, for the accounts and for remaining and strengthening itself on the European and international market. But even for Frankfurt, failure to reach an agreement would mean losing greater penetration in a market, the Italian one, considered very rich in opportunities.

And then there is the political question. First of all, the internal balances within the Union. There are many growing rumors of French pressure with Air France which would like to benefit from the agreement and is not willing to lose too much space on the Italian market. And a stop by Brussels to the Ita-Lufthansa agreement would risk being seen and experienced as an action against Italy, so much so that the question of many is: “why was the agreement between Air France-KLM and SAS not like that” checked”?”. In light of all this, there are those who point out that, from postponement to postponement, the final verdict was reached at the beginning of July. After the European elections. To prevent a possible veto (perhaps already more than in the air) from influencing the vote?