The European Union says that a merger between the two airlines will not breach antitrust rules.
German airline Lufthansa has secured EU approval to buy a 41% stake in Italy’s state-owned ITA Airways.
The €325 million deal will allow Lufthansa to scale up its services in Italy, one of Europe’s largest travel markets.
If ITA’s financial performance improves, Lufthansa has an option to secure full ownership.
The Commission’s verdict, namely that the merger does not threaten fair competition, puts an end to months of uncertainty surrounding the deal.
“At a time when consumers are facing increasingly higher prices for air travel, it is very important to preserve competition in the sector,” said the EU’s Margrethe Vestager, Executive Vice-President in charge of competition policy.
“We needed to prevent that passengers end up paying more or end up with fewer and lower quality air transport services on certain routes in and out of Italy. The package of remedies proposed by Lufthansa and the MEF on this cross-border deal fully addresses our competition concerns.”
In order to obtain the EU’s approval, Lufthansa and ITA have agreed to offer up some short-haul routes in Italy to rivals, enabling them to start non-stop flights between Rome or Milan and certain airports in Central Europe.
The German airline has confirmed it is in talks with Easyjet and Spanish airline Volotea.
In terms of long-haul flights, Lufthansa and ITA have also agreed to work with rivals to improve connections and increase the frequency of non-stop flights. Firms will cooperate to transfer passengers and baggage between connecting flights and will also exchange takeoff and landing slots with other airlines.
After numerous delays, the merger is a positive step for the Meloni government, which is seeking to protect state coffers by privatising a number of public companies.
The deal, however, cannot be finalised by the Commission until rival airlines agree to benefit from the anti-competition measures.
Some analysts stress that ITA will be a heavy burden for Lufthansa despite its prize market access, as the airline has been unprofitable for decades.
Lufthansa already has a roster of subsidiaries including Brussels Airlines, Austrian Airlines, and Swiss International Air Lines.