Two dueling bids are in for ITA Airways but CEO Fabio Lazzerini is quiet on what direction he sees the Italian government going with the privatization of the airline.
A consortium of Lufthansa and MSC Global, a shipping conglomerate, have offered €800-850 million ($819-$870 million) for roughly an 80 percent stake in the airline, while U.S. private equity firm Certares has offered €550-600 million for an undisclosed stake. Certares would partner with Air France and Delta Air Lines if their bid is accepted. Both parties submitted their bids to the Italian government on July 5.
“Both parties want to build on our business plan,” Lazzerini said of the two offers at the Farnborough Air Show in the UK on Tuesday. But he declined to say anything further on the bidding process, and instead deferred to the Italian government.
The government is reported to favor the Lufthansa and MSC offer as it would provide better “economic, strategic and social prospects” for the airline and country. However, a political crisis in Italy that could result in the resignation of the prime minister on Wednesday, July 20, could affect the process.
The bidding carries big stakes for all four airlines involved. Italy is Europe’s third largest aviation market and, while ITA lacks a dominant marketshare, it does have key hubs and lucrative slots in both Milan and Rome. The airline’s business plan calls for expanding its Rome Fiumicino hub into an intercontinental transit point rather than a destination for most travelers.
Transforming Fiumicino into an intercontinental connecting hub is a vision shared by Lufthansa Group CEO Carsten Spohr. In October, he said the Italian government should look to “Vienna, Bern and Brussels” — the capitals of Austria, Switzerland, and Belgium, respectively — to see how the group invests in airlines by incorporating their hubs into its global network. The group owns Austrian Airlines, Brussels Airlines, and Swiss International Air Lines.
“We believe the natural home for a new Italian carrier would be a partnership with Lufthansa,” Spohr said.
Air France-KLM has maintained and built on the hubs of its namesake airlines as well. However, during ITA forerunner Alitalia’s tenure as a member of Air France, Delta, and KLM’s immunized transatlantic joint venture, it was widely seen as a secondary member that did not receive the same network benefits as the larger partners.
“We are recovering 19 percent of our international long-haul, are coming to Fiumicino, and going to a different place in [Europe],” Lazzerini said on the business plan progress to date. Under Alitalia, which ITA replaced last October, the percentage of transit passengers in Rome was in the single digits.
However, he was clear that ITA cannot succeed as a “standalone” airline. The carrier needs a global partner, a fact that prompted its short-term membership in the SkyTeam Alliance that also includes Air France and Delta. Lazzerini said it can end the membership with no penalties — something that is rare among the global alliances — with just six months notice.
Lufthansa is a member of the Star Alliance.
A decision on the ITA privatization is expected from the Italian government shortly.
