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Airlines for sale update: TAP and ITA


The continuing merry-go-round of European governments trying to privatize airlines that were nationalized after years of financial difficulty followed by the pandemic continues. The two most in play at the moment are TAP Air Portugal and Italy's ITA Airways.

ITA, created as a state company to take over where bankrupt Alitalia left off, appeared to be on the verge of a sale to American investment firm Certares, aligned with AirFrance/KLM and Delta, but the Italian government announced yesterday that negotiations had failed and the company's period of exclusive rights to negotiate were ended.

In TAP's case, the government has not yet laid out specific provisions for privatization, but the airline has attracted a full suite of possible take-over partners, with expressions of interest from Lufthansa Group and from AirFrance/KLM already out there. Earlier this week, IAG, parent of British Air and Iberia also expressed an interest (and hinted they'd like to buy EasyJet as well).

The August decision on ITA favoring Certares was a surprise at the time, since most observers had expected the government to go with a joint offer by Lufthansa and its Italian/Swiss partner MSC. At the time, it appeared that the decision was based on Lufthansa's plan to buy 80% of shares and leave the government with a 20% holding, giving Lufthansa full operating control. The Certares offer was for a bare majority, and leaving the government with 40% of the seats on the board.

The Lufthansa offer was for a significantly higher per-share price, and it is possible that the deal may be revived, depending on the political temper of Italy's new right-wing government. Lufthansa is definitely still interested; CEO Carsten Spohr commented only weeks ago that "I am ready to fly to Rome every day, but it must be full privatization, as originally envisaged."

The best part of every trip is realizing that it has upset your expectations

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