Lufthansa Gets EU Nod To Buy $350-M Stake In Italy's ITA

Lufthansa has won EU antitrust approval to buy 41% of ITA Airways for 325 million euros ($350 million) after ceding routes and slots, boosting rival IAG's shares and hopes for its takeover of Air Europa, reported Foo Yun Chee, Ilona Wissenbach, and Angelo Amante for Reuters.

The deal will strengthen Lufthansa's presence in the lucrative southern European market and is one of three high-profile sector transactions in Europe. I Photo: Lufthansa

The deal will strengthen Lufthansa's presence in the lucrative southern European market and is one of three high-profile sector transactions in Europe, underscoring efforts by airlines to increase scale to offset rising operating costs.

Lufthansa CEO Carsten Spohr highlighted that ITA's Fiumicino airport hub provided the group with better access to Africa and Latin America and that it had much room for growth.

Lufthansa shares were up 3.27% at 1339 GMT after the announcement, with IAG shares up by 4.6%, anticipating that the approval made its takeover of Air Europa more likely. IAG expressed satisfaction with the Commission's recognition of the benefits of airline consolidation.

"Regulatory scrutiny remains high, but the deal has likely increased confidence that airline M&A can gain approval, subject to remedies negotiated with competition authorities," said Ruairi Cullinane, an analyst at RBC, as reported by Joanna Plucinska for Reuters.