Italian carrier ITA Airways gets joint bid from Lufthansa, MSC

The bidders have requested 90 days of exclusivity to work on the details to submit an expression of interest.

No financial details were disclosed in the statement by ITA
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No financial details were disclosed in the statement by ITA. (Photo Credit: Creative Commons; Vincenzo Gentile)

New Italian national carrier ITA Airways has received a joint bid from German carrier Lufthansa and Swiss-based Mediterranean Shipping Company (MSC), the world's largest container carrier by operating capacity, to buy a majority stake.

"Both the MSC Group and Lufthansa have expressed the wish that the Italian Government maintains a minority stake in the company," ITA says in a statement.

The bidders have requested 90 days of exclusivity to work on the details to submit an expression of interest (EoI).

No financial details were disclosed in the statement by ITA.

"ITA Airways is satisfied that the work carried out in recent months to offer the best prospects to the company is starting to have the expected results, providing for a company recognised as viable for partners of international reputation both in passenger and cargo transport," the airline says.

The ITA board, which is to meet on January 31, is likely to consider details of the EoI provided it gets approval from the government.

Meanwhile, Reuters had reported earlier that Lufthansa is looking to buy a 40 percent stake in state-owned Alitalia's successor ITA Airways.

In a similar divestment, the central government sold 100 percent stake in national carrier Air India to the Tata Group. The winning bid was for Rs 18,000 crore as enterprise value, and the transaction does not include non-core assets including land and building valued at Rs 14,718 crore.

ITA story so far
The airline has been active since November 2020. In 2022, the fleet is expected to rise to 78 aircraft (+26 vs 2021) including 13 wide-bodies (+6 vs 2021) and 65 narrow-bodies (+20 vs 2021).

ITA Airways will focus its business on the Rome Fiumicino hub and Milan Linate airport with plans to fly to 44 destinations with 59 routes, growing to 74 destinations and 89 routes by 2025.

An industry source said Lufthansa has been trying for a long time to get into the Italian market, and it was just logical for them to chase ITA. Italy is a huge market and they would also have synergies with Swiss and Austrian. Italy is also a major gateway for the Middle-East carriers and they need to counteract that challenge.

Vertical integration gathers speed
The move by MSC has to be seen in the context of large ocean carriers, including Maersk and CMA-CGM, offering integrated operations to customers.

While Maersk spent $3.6 billion to buy LF Logistics, CMA acquired most of the commerce & lifestyle operations of US-based Ingram Micro for $3 billion. CMA has also ordered four A350F freighters, Maersk is adding three leased cargo planes and two new B777Fs.

"I expect to see a flurry of mid-sized and large-size acquisitions in the coming 18 months as the window for the one-stop logistics provider strategy seems to be wide open during that time," says Peter Sand, Chief Analyst, Xeneta.

Maersk aims to become a  considerable player in the global air cargo world, according to Vikash Agarwal, Managing Director, Maersk South Asia.

"Our aim is to become a well-established global air freight provider with a network covering all continents and with top notch products needed by our customers."

With ocean carriers set to report $200 billion profits this year, the acquisition game is set to intensify over the coming months.

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