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European regulators have approved Lufthansa Group’s bid to buy a 41% stake in troubled Italian flag carrier ITA Airways, the company said on Wednesday. The deal, expected to close later this year, will set the stage for ITA to become the latest to participate in a wave of consolidation in the European industry.

As part of the move, ITA is expected to join the Miles & More loyalty program, Lufthansa leaders said. And the company “aims” for the airline to become part of the Star Alliance.

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EU gives green light

The European Commission’s approval in Brussels came more than a year after the two companies first announced the deal, which would see Lufthansa acquire a 41% stake in ITA.

The deal gives Lufthansa Group an option to acquire the remaining 59% of ITA’s shares in the future. If the Lufthansa group decides to move forward on that front, it could come as early as 2025 under an arrangement approved this week by European Union officials.

The merger is expected to be completed by the fourth quarter of this year, Lufthansa Group said in a statement announcing the news. At the time, the company is planning for ITA’s “swift integration” into the group, which already includes European airlines.

“We look forward to welcoming ITA Airways and its outstanding employees as a new member of our airline family very soon,” said Lufthansa Group CEO Carsten Spoor. A sentence Wednesday.

ITA Airways was formed in 2020 from the remains of Alitalia, and the Italian government took over the troubled airline during the COVID-19 pandemic. To date, ITA has not been able to shake Alitalia’s longstanding reputation for losing money.

A similar brand, new alliances and loyalty programs are expected

Joining the Lufthansa Group, ITA Airways will remain an airline brand. It is consistent with other mergers seen in the European airline industry.

ITA will be the group’s sixth airline, joining Lufthansa, Eurowings, Swiss, Austrian Airlines and Brussels Airlines.

Immediately after the deal closes, Lufthansa Group said, ITA will begin codesharing with its new sister brands.

ITA will also join the Miles & More loyalty program used by other airlines in the group and joint booking and sales channels, the company said, citing “numerous synergies” with aircraft and fuel purchase decisions.

A key step yet to come: a change in engagement. While Lufthansa Group’s full-service airlines are part of Star Alliance, ITA is part of it. SkyTeam today.

Announcing the news, Lufthansa Group said it aims for ITA to join the Star Alliance “in the near future”.

It could potentially offer Star Alliance loyalists more mileage earning and partner redemption opportunities on flights to Rome Fiumicino Leonardo da Vinci Airport (FCO), which will become the Lufthansa Group’s southernmost hub, the company noted.

Footprint of ITA

ITA flies nonstop from Rome to just over half a dozen US cities. Its July 2024 US route map, as shown in Sirium’s map below, includes Los Angeles International Airport (LAX) and San Francisco International Airport (SFO) on the West Coast, Chicago’s O’Hare International Airport (ORD) in the Midwest, and a host of East Coast airports: Boston Logan International Airport (BOS), New York’s John F. Kennedy International Airport (JFK), Washington’s Dulles International Airport (IAD) and Miami International Airport (MIA).

European airline consolidation

The ITA acquisition also marks the latest step in a wave of airline consolidation in Europe.

The continent is today home to three major parent companies.

Along with Lufthansa Group, International Airlines Group owns major carriers such as British Airways, Iberia, Aer Lingus and low-cost Vueling. (It is worth noting that Finnair and Qatar Airways share Also Avios as loyalty currency with many IAG brands.)

Air France-KLM Group, which owns its two namesake brands based in Paris and Amsterdam respectively, has struck a deal to buy a stake in Scandinavian Airlines. It still needs regulatory approval.

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