Lufthansa Group, which took control of Italy’s ITA Airways last Monday in a deal that had been in the works for the past two years, appears to be in the market for more deals.
Only the week before closing the ITA deal, the German airline group bought 10% of Air Baltic, a growing Latvian carrier that links Tallinn, Riga and other Baltic cities with the rest of Europe, and is reported to be looking at taking a similar stake in Spain’s Air Europa. Although the stakes are relatively small, they may be a first step toward complete control. They are under the threshhold where regulatory issues arise, but are enough to give Lufthansa a seat on AirBaltic’s board and ‘feet under the table’ to guide developments toward an eventual offer for more.
In the case of Air Europa, which flies a variety of routes to Europe, North and South America, the Caribbean, Morocco, and Tunisia, would bring significant South America routes to the group. Air Europa was twice in deals to sell itself to IAG, the British-Spanish parent of British Air and Iberia, but those deals fell through over price and regulatory issues. IAG still owns 20% of Air Europa.
The other big play in European airlines is still in a state of suspended animation: that’s TAP Portugal, which the Portuguese government is planning to put on the block again soon. Lufthansa, IAG and KLM/Air France have all expressed interest.
Meanwhile, changes are already taking place at ITA following its entry into the Lufthansa orbit. Starting February 25 about 100 Lufthansa Group flights will be code-shared with ITA, with more to be added later. To make connections easier, ITA will move its operations at Frankfurt and Munich, Lufthansa’s main hubs, to the same terminals used by Lufthansa.
On the loyalty and alliance front, ITA is set to leave the SkyTeam alliance by April 30, although passengers already booked through SkyTeam will be unaffected. ITA will eventually join Star Alliance; Lufthansa’s other network carriers are all members. For loyalty points collectors, there’s also news; members of Lufthansa’s Miles & More plan and ITA’s Volare are now able to redeem their points for flights on each other’s flights. No word as yet on whether Volare will eventually be folded into the plan used by all other Lufthansa Group airlines.
