Econostrum | Economic News in the Mediterranean

Air France-KLM in the front row for the privatization of the ex-Alitalia which became ITA Airways

Written by Eric Apim on Thursday, September 1st 2022 à 14:50 | Read 397 times

The heir of Alitalia will be privatized (photo: ITA Airways)
The heir of Alitalia will be privatized (photo: ITA Airways)
ITALY / FRANCE / UNITED STATES. The Italian Ministry of the Economy has decided to open exclusive negotiations with the American investment fund Certares for the partial buyout of ITA Airways. The former Alitalia is now, and since June 2020, 100% owned by the Italian state. It was also coveted by an alliance between MSC and Lufthansa.

The New Yorkers of Certares are accompanied in this file by Air France-KLM and Delta Air Lines. According to the Italian press, and in particular the daily Il Messaggero, this consortium is proposing to take a 56% stake in the airline for about €600 million paid by the Americans. The competitors in this tender, the Italian-Swiss MSC and the German Lufthansa, were considering putting €850 million into the operation in exchange for the purchase of 80% of ITA (60% for MSC and 20% for Lufthansa).

The Italian government's choice shows its desire to keep control of its national airline, for which, between Alitalia and ITA Airways, it has already spent more than €13 billion to ensure its survival. The Italian state will retain 44% of the shares and is demanding two of the five seats on the future board of directors of ITA Airways.

In its announcement on Wednesday evening, August 31, 2022, the Italian Ministry specified that "at the end of the exclusive negotiations, binding agreements will only be signed if their content is fully satisfactory for the public shareholder".

No short-term entry of Air France-KLM in the capital of ITA Airways

Air France-KLM and Delta Air Lines should only intervene at the commercial and operational level (notably through code-sharing) and not take a stake in the company. At least initially. "At this stage, Air France-KLM is not investing in the capital of ITA. However, the Air France-KLM group could consider taking a minority stake in ITA in the medium term," confirms a statement from the French-Dutch company.

The French company held up to 25% of Alitalia before gradually withdrawing from it from 2013. In June 2014, Etihad Airways seized 49% of the capital and avoided, barely, the bankruptcy. But the Emirati had to quickly throw in the towel causing the state to put Alitalia under supervision.

"Alongside its joint-venture partner Delta Air Lines, Air France-KLM wishes to strengthen ties with ITA, building on the existing commercial partnership between the airlines, illustrated by the implementation of code-share agreements and ITA's entry into the SkyTeam alliance, of which Air France-KLM and Delta Air Lines are founding members," said the Air France-KLM press release. The text adds that this merger will offer many opportunities to the Italian airline, including "an increased presence on the North Atlantic, on which Air France-KLM, Delta Air Lines and Virgin Atlantic operate the most important joint venture, as well as the possibility of establishing an exclusive partnership between the Flying Blue (Air France-KLM), Sky Miles (Delta Air Lines) and Volare (ITA - one of the most important frequent flyer programs in Italy) loyalty programs, for the benefit of the Italian airline's customers."

ITA Airways was created on November 20, 2000 following the bankruptcy of Alitalia, of which it took over most of the activities, employees and aircraft. It started its first flights on October 15, 2021. The Italian company focuses its activities on the hubs of Rome Fiumicino and Milan Linate. It serves Europe and the American continent, Egypt, Japan and Israel.

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