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Could Lufthansa-ITA deal be grounded?


Several reports surfaced last week that Lufthansa Group might walk away from its deal to buy 41% of ITA Airways and take over operational management of the state-owned Italian carrier because of delays in EU approval of the deal.

The EU competition regulators, who were originally expected to have completed their approval of the deal by this month, have gone into a higher-level examination of the deal and there are indications it might not be ready until late in the year.

As well, Lufthansa is reported by the Italian newspaper La Republica, to be ready to walk if the EU regulators ask too many concessions from the airlines to approve the deal, especially if they require limits to ITA's long-haul flights, which Lufthansa believes are key to making the airline profitable.

Publicly, however, Lufthansa continues to say it expects the deal to go through, and the Italian government, which is anxious to unload the so-far-unprofitable carrier, has asked the EU regulators to come to a decision quickly. It is, of course, possible, that the rumors are meant to push the decision along.

ITA was created in 2021 to replace the bankrupt former flag carrier Alitalia, and absorbed many of its employees and equipment. ITA was created with the idea that it would be privatized, and Lufthansa became the successful bidder after others, including a group that included Delta and AirFrance/KLM could not come to terms.

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