We don’t know when the psychodrama of the ITA/Alitalia takeover will end. While the takeover of the airline by the Certares investment fund along with Air France-KLM and Delta seemed to be a foregone conclusion, it seems that the dossier is now at a standstill and that Lufthansa is back in the race.
End of the exclusive negotiation period
After a call for tenders that opposed Certares, Air France-KLM and Delta on the one hand, and Lufthansa and MSC on the other, it is the former that the Italian government has chosen to enter into exclusive negotiations for the purchase of ITA.
But this period of exclusivity is over and the sale is still not finalized. Worse, it seems that the dossier has not progressed much during this period, to the great surprise of potential buyers who have not found people willing to move things forward.
Today it seems that not only Certares and its partners are no longer talking to the Italian government, but also that the latter has given Lufthansa access to the “data room” containing the financial information, with MSC withdrawing from the process.
Political uncertainty from the start
It must be said that from the outset there was uncertainty about the dossier: Italy was going to have elections, perhaps to appoint a new government, and there was nothing to say that this government would want to sell the airline, nor under these conditions. Especially if it was a nationalist/sovereignist government unwilling to sell off a national symbol.
And this is what happened with the appointment of Giorgia Meloni as Prime Minister.
But if at the beginning the government seemed to disagree on the very principle of the sale, it seems that it has come to its senses. On the other hand, it does not seem to be sensitive to the arguments which had presided over the choice of Certares and its airline partners.
Two offers, two approaches
Indeed, the two offers made were radically different.
Lufthansa and MSC offered more money for full control of the airline.
Certares, Air France-KLM and Delta offered less to acquire 50% of the airline plus one share. But in this scheme, Certares brought in all the money, with Air France-KLM positioning itself as a mere commercial partner.
An offer which, in terms of governance, left a significant weight to the Italians, a weight that we found excessive given the past mistakes of the airline when it was still called Alitalia.
We believed that the winner would depend on whether the choice was economic or political. An economic choice would mean Lufthansa, a political choice Certares.
And it was the political criterion that prevailed, giving Certares and his allies what we thought was a Pyrrhic victory with too much power left to the Italians that made us fear that the airline would be unmanageable.
What made the new government change its mind?
An industrial approach for the new Italian government?
If nothing has been leaked on the subject, we can still make assumptions.
The first would be that if they were to sell the airline, they might as well get a better price for it and get really out of it. This would logically lead to choosing Lufthansa.
The second would be that the government, concerned about the future of the airline, wants it to be integrated into a solid group with people who know the airline business. Here again, Lufthansa offers the most guarantees in this area, since in the Certares offer Air France-KLM does not put in any money and positions itself just as a commercial partner without any power over the airline, which would be governed by the investment fund.
This is the most likely explanation and it seems credible that, for the future of the airline, the government would be more reassured to see it join the Lufthansa Group with Lufthansa, Swiss, Brussels Airlines and Austrian rather than belong to Certares without joining the Air France-KLM group.
What future for ITA?
What we know so far is that Lufthansa is still interested and has again access to the data room while its partner MSC has withdrawn. So if the German group makes a new offer, it will do it alone or with a new partner, this option not seeming very credible in such a short time. Behind the scenes there is talk of the railway company Ferrovie del Stato or Atlantia, the holding company of the Benetton group, which had already been part of a project to take over Alitalia with Delta.
Can Certares and its partners improve their offer? Technically yes by offering more but that doesn’t seem to be their logic from the start. And, moreover, if the issue is to back ITA with a large group, it cannot work. Still handicapped by the fact of not having reimbursed its state aid received during the COVID, unlike Lufthansa, the Franco-Dutch group cannot take more than 10% of the capital of an airline. A takeover is therefore impossible in the current state of affairs, especially as it still has to recapitalize.
And if the exclusive negotiation period did not work out, we do not see why the government would continue with Certares, Air France-KLM and Delta now.
And time is running out. The state has just granted a loan of 400 million to ITA and the situation cannot last forever because Europe is watching and will not tolerate that ITA lives under perfusion as Alitalia did. And we don’t think that this is the will of the Italian government either.
Everything seems to suggest that it is finally Lufthansa that will acquire ITA, even if, given the many twists and turns in this case, we can no longer be sure of anything. Indeed, the future privatization of TAP is looming, and nothing says that Lufthansa has the means or the desire to complete these two projects alone. If not, a choice will have to be made.
Promised to Certares, Air France-KLM and Delta, ITA is still in the dark as to the identity of its buyer, which could finally be Lufthansa, even if we are never far to a reversal in this case.
This would be a major blow for Air France-KLM, which would lose the opportunity to keep ITA in its fold if it does not own it, and would see the Lufthansa Group further increase its footprint in the European sky. All this before the start of discussions for the privatization of TAP, where the German group also seems to be the great favorite.