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Lufthansa Group shares (ETR: LHAG) saw a modest rise on Thursday following comments from CEO Carsten Spohr, who indicated in an interview with Italian daily Corriere della Sera that the airline might increase its stake in Italy’s ITA Airways to 90% starting early next year.
This announcement came on the heels of Lufthansa receiving the green light from European Union antitrust authorities to acquire 41% of state-owned ITA for €325 million. This strategic move is set to enhance Lufthansa’s presence in the crucial southern European market, helping to mitigate rising costs through increased scale. Spohr highlighted that the acquisition would also improve Lufthansa’s access to African and Latin American routes.
Scheduled for completion in the fourth quarter of 2024, this deal will position Italy as Lufthansa’s fifth significant market, following Germany and the U.S. in revenue generation. This expansion marks a significant step for the German carrier as it seeks to diversify and strengthen its market presence.
The agreement with the EU includes provisions for Lufthansa and ITA to relinquish some Italian short-haul flights to competitors. This part of the deal, ensuring fair competition, stipulates that these routes must be operational by EU-approved rivals before finalizing the transaction. This condition aims to maintain market balance and prevent monopolistic dominance by the newly expanded Lufthansa-ITA entity.
This strategic investment in ITA Airways not only broadens Lufthansa’s operational footprint but also aligns with its long-term growth objectives. The move reflects Lufthansa’s adaptive strategies in an evolving aviation landscape, emphasizing its commitment to expanding influence in key global markets.
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