Lufthansa weighs solo ITA bid after MSC bails out

Bloomberg

Deutsche Lufthansa AG is evaluating a solo bid for Alitalia successor ITA Airways after talks between the Italian government and other potential suitors collapsed, according to people with the matter.
The German airline group is looking through ITA’s data room and could make a bid to acquire the carrier on its own, said the people, asking not to be named because the discussions are private.
Lufthansa’s management is weighing a range of options, including becoming a minority partner or walking away from any offer, said one of the people. Discussions remain preliminary and the airline has not decided on a definitive course of action, the person said.
Lufthansa has been forced to evaluate its next steps after partner and leading bidder MSC Mediterranean Shipping Company SA said that it’s abandoning the process, dealing a blow to Italy’s efforts to sell ITA after years of losses by the carrier and its predecessor.
Lufthansa has been linked to possible moves on ITA and Alitalia for years. Gaining control of the carrier would prevent a rival from establishing a major transatlantic hub in Milan, which could threaten Lufthansa’s profitable long-haul operation in Munich.
But there are hurdles to a solo bid. Italy’s aviation market is significantly more competitive than Germany, with low-cost carriers including Ryanair Plc holding hefty market shares and dragging down average ticket prices.
That could shape up to be a problem for Lufthansa, which needs to boost profitability to pay down debts incurred during the pandemic.
Italian Finance Minister Giancarlo Giorgetti said on Tuesday that Lufthansa “is still interested” and that ITA’s data room remains open. Lufthansa declined to comment.
ITA and Alitalia before it have been losing money for years. The new carrier, which began operations in 2021, has only been able to continue flying thanks to state aid.
After a string of administrations failed to find a sustainable partner for the company, its future is now in the hands of new Prime Minister Giorgia Meloni, who would favor the involvement of an Italian partner, according to the people.
MSC’s about-face comes weeks after the Meloni government indicated it would restart talks with the company and Lufthansa. That came after the previous administration chose a rival group led by US private equity firm Certares Management LLC and including Air France-KLM and Delta Air Lines Inc. as the preferred bidder.