(Milan) After many reversals, the privatization of ITA Airways seems to have arrived at good port: the Italian State and Lufthansa ended up signing an agreement on Thursday on the entry of the German airline giant into the capital of the public company born from the ashes from Alitalia.

Lufthansa intends to initially acquire a minority stake of 41% in the Italian public company, reserving the option to increase the capital to 100% in the medium term, depending on the financial objectives achieved by ITA.

Rome had given the green light in February 2022 to the privatization of ITA Airways, 100% controlled by the State, after years of fruitless search for a buyer for its ancestor Alitalia.

The deal was signed in Rome by Economy Minister Giancarlo Giorgetti and Lufthansa boss Carsten Spohr.

Lufthansa said it would pay 325 million euros to acquire its stake, through a capital increase. The Ministry of Finance will inject a final tranche of 250 million euros to strengthen the capital of ITA Airways.

Brussels had given the green light in 2021 to the take-off of ITA and authorized financing of 1.35 billion euros of public funds, provided that it ends up flying on its own in the long term.

This operation of “strategic importance” will allow the German group to expand its “access to the third largest air market in Europe”, welcomed Lufthansa.

According to the agreement, “various options” are offered to Lufthansa to “increase its stake in ITA Airways or acquire it outright”, explains the German group.

This agreement “will lead to a win-win situation for Italy, ITA Airways and the Lufthansa Group”, commented Mr. Spohr.

“This is good news for Italian consumers and for Europe, as the strengthening of ITA will boost competition in the Italian market,” he said.

This agreement “marks the end of a journey in the history of the national carrier, which leads to the prospect of integration with a major European carrier”, said Mr. Giorgetti.

“ITA has turned the page, we have resolved a situation that seemed impossible, no one had succeeded,” Prime Minister Giorgia Meloni said in late April, commenting on the imminent agreement with Lufthansa.

She discussed the subject with German Chancellor Olaf Scholz last Friday on the sidelines of the G7 Summit in Hiroshima.

A sale of ITA Airways will be a breath of fresh air for the Italian State because, over the years, it has had to pay more than 13 billion euros to bail out the national company.

But nothing helped, Alitalia, placed under public administration in 2017, accumulated losses of 11.4 billion euros between 2000 and 2020.

After 74 turbulent years of flying, Alitalia shut down its engines in October 2021 to clear the way for ITA Airways, in an airline market that was struggling to recover from the turbulence of the coronavirus pandemic.

Lufthansa’s takeover of ITA Airways comes after two failed attempts to take a stake in Alitalia, in 2009 and 2019.

Again a candidate alongside the Italian-Swiss shipping giant MSC in January 2022, she had her hair cut by the American investment fund Certares.

The offer from Certares, associated with Air France-KLM and Delta Air Lines, had been selected by former Prime Minister Mario Draghi for exclusive negotiations, before being rejected by his successor, Giorgia Meloni.

Turbulence had also shaken ITA Airways, whose executive chairman Alfredo Altavilla was twice disavowed by the state shareholder and had to pack up in November, before being replaced by Antonino Turicchi.

Lufthansa, which already has Brussels Airlines, Austrian Airlines, Swiss and another Italian company, Air Dolomiti, in its pocket, should take advantage of its alliance with ITA to strengthen itself on the American continent, but also in Africa and Asia, by using the hub Rome-Fiumicino.

ITA Airways currently serves 64 destinations, including ten intercontinental, and is seeking to strengthen its position in long-haul.

In terms of accounts, the young company did little better than its ancestor, suffering a net loss of 486 million euros in 2022, due in particular to the rise in kerosene prices.

Upon acquisition of its minority share, Lufthansa should take control of ITA on an operational level, even if the Italian State retains a right of scrutiny over strategic decisions.