By Joanna Plucinska and Klaus Lauer
LONDON (Reuters) -Lufthansa sought to reassure investors about ITA’s financial health on Friday after the German carrier won EU approval this week to buy 41% of the Italian airline, which remains under the shadow of its predecessor Alitalia.
ITA Airways took to the air in 2021 and has since sought to shake off the troubled legacy of Alitalia, which burned through an estimated 10 billion euros ($10.8 billion) of state funds in its last 14 years.
Once a symbol of glamour and style for Italy and a beacon of national identity, the government accepted that ITA, Alitalia’s new configuration, needed strong ownership to survive.
As part of the deal, Lufthansa will give itself two years to assess ITA’s financial health before pushing for a full takeover, in a similar strategy to its takeover of Swiss Airlines and Brussels Airlines.
“We only need to execute if it is economically viable, even though you can hear my optimism and the optimism of the whole group that this will be the case,” CEO Carsten Spohr told a conference call for investors and analysts.
It took the German airline group more than a year to win European Commission approval for its purchase of a stake in the Italian carrier, eventually agreeing to a number of concessions for which the details are still being ironed out.
Spohr said he expected ITA’s business costs to improve further, given the efficiency of Rome’s Fiumicino Airport, and that the airline’s leasing debt was not a major concern.
On Thursday, Spohr told Italian media that Lufthansa could take a 90% stake in ITA as soon as next year.
Lufthansa has faced its own financial struggles, recently reporting a profit warning ahead of first quarter earnings on the back of higher-than-expected strike costs. It also received financial help from the German government during the pandemic.
Alitalia faced possible takeovers from numerous suitors, including Air France-KLM, which did not materialise, and the carrier was bailed out repeatedly over decades.
($1 = 0.9239 euros)
(Reporting by Joanna Plucinska and Klaus Lauer; editing by David Goodman and Alexander Smith)
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