Lufthansa’s Strategic Expansion: The Path to Majority Control of ITA Airways

The German aviation giant Lufthansa Group is positioned to significantly expand its stake in Italy’s national carrier ITA Airways, potentially increasing its ownership from the current 41 percent to 90 percent by June 2026. This strategic move represents a pivotal moment in European aviation consolidation, as Lufthansa seeks to strengthen its position in Southern Europe while ITA Airways demonstrates remarkable financial recovery following its emergence from the ashes of the troubled Alitalia. The potential acquisition comes at a time when ITA Airways has achieved its first-ever positive operating profit, posting a positive EBIT of 3 million euros in 2024, ahead of business plan forecasts and without yet benefiting from synergies with the Lufthansa Group. This development underscores the success of the integration process that began in early 2025, when Lufthansa officially acquired its initial 41 percent stake for 325 million euros, marking ITA Airways as the fifth network airline within the Lufthansa Group portfolio.

The significance of this move extends beyond the financial and operational turnaround of ITA Airways. It reflects broader trends in European aviation, where consolidation, operational synergies, and strategic market positioning are increasingly necessary for survival and growth. The Lufthansa-ITA Airways partnership is being closely watched as a potential model for future airline integrations, balancing regulatory requirements with market realities and national interests.

As European air travel rebounds from the challenges of the past decade, the Lufthansa-ITA Airways deal stands as a case study in how legacy carriers can reinvent themselves through targeted partnerships, strategic investments, and regulatory cooperation. The journey toward majority control is not just about ownership percentages; it is about transforming the competitive landscape of European aviation.

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Historical Context and Strategic Foundation

The relationship between Lufthansa and ITA Airways represents a carefully orchestrated rescue and transformation of Italy’s aviation sector following decades of financial difficulties under the previous state carrier Alitalia. ITA Airways was established as the successor to Alitalia, inheriting both the challenges and opportunities of operating Italy’s flagship airline. The German aviation group’s initial interest in the Italian carrier was driven by strategic considerations that positioned Italy as Lufthansa’s second most critical international market after its core German-speaking regions.

The foundation for this partnership was laid in May 2023 when Lufthansa and the Italian Ministry of Economy and Finance first agreed to the German airline’s acquisition of a minority stake of 41 percent in ITA Airways. This initial agreement represented more than a simple investment; it was a comprehensive strategy to integrate the Italian carrier into Lufthansa’s extensive network, which includes Austrian Airlines, Swiss International Air Lines, Brussels Airlines, and other subsidiaries. The deal structure from the outset included provisions for future expansion, with options for the acquisition of remaining shares that could be exercised beginning in 2025.

The regulatory journey proved complex and time-consuming, requiring extensive negotiations with the European Commission to address competition concerns. The Commission’s investigation lasted almost exactly one year after notification, reflecting the thorough examination of potential market impacts. The regulatory approval process involved significant commitments from Lufthansa and the Italian government, including the establishment of remedy packages to ensure fair competition in both short-haul and long-haul markets. These remedies required Lufthansa to make assets available to competitor airlines, facilitate access to domestic networks, and transfer valuable slots at Milan Linate airport to maintain competitive balance.

“The ITA Airways team has written an impressive success story in recent years and, with great energy, passion and expertise, has built an airline that is already the pride of an entire nation.”

Financial Performance and Operational Excellence

ITA Airways’ financial transformation has been notable, providing the strong foundation that makes Lufthansa’s expanded investment attractive and strategically sound. The Italian carrier achieved a historic milestone in 2024 by posting its first-ever positive EBIT of 3 million euros, representing a dramatic improvement of 78 million euros compared to the previous year. This achievement came ahead of the company’s business plan forecasts and was accomplished without yet benefiting from the operational and commercial synergies expected from the Lufthansa Group integration.

The comprehensive financial picture for 2024 demonstrates the breadth of ITA Airways’ operational improvements. Total revenues reached 3.1 billion euros, a substantial 26 percent increase compared to 2023, with passenger traffic business generating 2.7 billion euros of this total. The carrier’s EBITDA performance was equally impressive, reaching 337 million euros and improving by 267 million euros year-over-year. These figures reflect not just financial recovery but operational excellence, as ITA Airways operated approximately 138,000 scheduled flights during 2024, an 11 percent increase from the previous year, while transporting approximately 18 million passengers, a 19 percent increase.

The operational metrics demonstrate ITA Airways’ commitment to service excellence and market competitiveness. The carrier’s punctuality rate of 87.9 percent for flights landing within 15 minutes of scheduled time, combined with a regularity rate of 99.6 percent for flights operated compared to those scheduled, places ITA Airways among the top three carriers in the European market. These performance indicators are particularly significant given the challenging operational environment in European aviation and the ongoing integration with Lufthansa Group systems and procedures.

“A historic achievement which testifies to the company’s transformation from a start-up to a solid and growing operator.”

Strategic Expansion and Majority Control Negotiations

The discussions surrounding Lufthansa’s potential increase to 90 percent ownership of ITA Airways represent a natural progression of the successful initial integration and reflect both carriers’ confidence in the strategic value of deeper partnership. According to reports, Lufthansa Group is working with the Italian Ministry of Economy and Finance to increase its stake from the current 41 percent to 90 percent by June 2026. This expansion would involve an additional investment of 325 million euros, matching the amount of the initial investment, plus a potential performance-related bonus of up to 100 million euros.

The timeline for this expanded acquisition reflects careful strategic planning and regulatory considerations. Under the agreements reached, Lufthansa has its next opportunity to raise its stake to 90 percent in the summer of 2026. Lufthansa has previously indicated that the timeline for this move will depend on various factors, including how quickly ITA Airways’ profitability continues to improve. The positive financial results achieved in 2024 and the strong start to 2025 have evidently exceeded expectations, creating favorable conditions for accelerating the acquisition timeline.

The governance implications of moving to 90 percent ownership would be significant, fundamentally altering the control structure and decision-making processes within ITA Airways. Under the proposed arrangement, Lufthansa would appoint four out of five board members, while the Italian government might retain the chairmanship position. This structure would provide Lufthansa with operational control while maintaining symbolic Italian leadership, addressing both practical management needs and national pride considerations.

Regulatory Environment and Competitive Dynamics

The regulatory landscape surrounding Lufthansa’s expanded acquisition of ITA Airways reflects the complex balance between promoting European aviation competitiveness and maintaining fair market competition. The initial 41 percent acquisition required extensive regulatory scrutiny and the implementation of comprehensive remedy packages to address competition concerns identified by the European Commission. These remedies were structured across three key areas: short-haul routes, long-haul routes, and slot allocations at Milan Linate airport, each designed to maintain competitive alternatives for consumers and rival airlines.

The remedy framework established for the initial acquisition demonstrates the Commission’s sophisticated approach to aviation merger control. For short-haul routes, Lufthansa and the Italian Ministry of Economy and Finance were required to make assets available to competitor airlines to enable non-stop flights between Rome or Milan and certain Central European airports. Additionally, one of these competitor airlines would be granted access to ITA’s domestic network to offer indirect connections between Central European airports and Italian cities other than Rome and Milan.

The approval of EasyJet, IAG (International Airlines Group), and Air France-KLM as suitable remedy takers represents a crucial validation of the competitive safeguards. EasyJet was selected as the remedy taker for short-haul routes and the transfer of slots at Milan Linate airport, while IAG and Air France-KLM were chosen for long-haul route remedies. The Commission’s acceptance of these carriers as suitable remedy takers was based on their independence from Lufthansa, their financial resources and proven expertise, and their incentives to act as viable competitive forces.

“The remedy framework already in place would continue to operate, and the competitive concerns that drove the initial investigation have been addressed through the implemented measures.”

Operational Integration and Network Synergies

The operational integration of ITA Airways into the Lufthansa Group network has proceeded systematically and successfully, creating the foundation for enhanced passenger services and operational efficiencies. The integration began immediately upon completion of the 41 percent acquisition in early 2025, with ITA Airways becoming the fifth network airline within the Lufthansa Group alongside Austrian Airlines, Brussels Airlines, Lufthansa, and Swiss International Air Lines. This integration has encompassed multiple dimensions, from loyalty program alignment to operational coordination and network optimization.

The loyalty program integration represents one of the most visible benefits for passengers, with Miles & More members now able to earn and redeem miles on ITA Airways flights effective from February 2025. Reciprocally, members of ITA Airways’ Volare loyalty program can earn and redeem points on flights operated by Lufthansa Group network carriers. This cross-program functionality significantly expands earning and redemption opportunities for frequent travelers and creates stronger customer loyalty across the combined network.

The codeshare partnership has evolved rapidly to provide comprehensive network coverage and seamless connectivity. The European codeshare partnership launched in March 2025 covers over 100 routes, while long-haul codeshare services began on July 1, 2025. The intercontinental codeshare agreements extend ITA Airways’ network reach to destinations in Africa, Asia, and South America through Lufthansa Group flights. This expanded network coverage allows passengers to reach final intercontinental destinations with a single ticket, providing easier, smoother, and safer travel experiences.

Strategic Implications for European Aviation

Lufthansa’s expanding control of ITA Airways represents a significant development in the ongoing consolidation of European aviation, with implications that extend well beyond the immediate participants to influence competitive dynamics across the continent. The acquisition positions Lufthansa to strengthen its presence in Southern Europe while providing a platform for competing more effectively against other major European airline groups, particularly Air France-KLM and IAG. Italy’s strategic importance as a major European economy and travel market makes control of ITA Airways a valuable asset for network expansion and market penetration.

The geographical positioning of ITA Airways’ hub airports provides Lufthansa with enhanced access to Mediterranean markets and improved connectivity for its broader European network. Rome Fiumicino and Milan Linate airports serve as crucial gateways for both business and leisure travel, with Rome functioning as a natural hub for connections to Africa and the Middle East, while Milan provides access to Northern Italy’s industrial heartland. These strategic positions complement Lufthansa’s existing hubs in Frankfurt, Munich, Zurich, Vienna, and Brussels, creating a more comprehensive European network with improved geographical coverage.

The integration of ITA Airways into the Star Alliance, expected to be completed in the first half of 2026, will further reshape alliance competition in Europe. ITA Airways’ departure from SkyTeam, to be finalized by April 30, 2026, will reduce that alliance’s presence in the Italian market while strengthening Star Alliance’s position. This realignment reflects the broader trend toward alliance consolidation and the strategic importance of hub positioning in global airline competition.

Financial Market Impact and Investment Implications

The Lufthansa Group’s performance in 2024 and early 2025 provides important context for understanding the financial capacity and strategic rationale behind the expanded ITA Airways acquisition. Lufthansa Group reported record-breaking revenue of 37.6 billion euros for 2024, the highest in the company’s history, with an operating profit (Adjusted EBIT) of 1.6 billion euros. These strong financial results demonstrate Lufthansa’s capacity to undertake significant acquisitions while maintaining operational performance and shareholder returns.

The first quarter of 2025 showed continued positive momentum for the Lufthansa Group, with revenues increasing by 10 percent to 8.1 billion euros compared to the same period in 2024. The company’s adjusted EBIT loss of 722 million euros for the first quarter represented a significant improvement from the 849 million euro loss recorded in the first quarter of 2024. This operational improvement, combined with record passenger volumes and enhanced operational stability, provides the financial foundation for expanded investment in ITA Airways.

The proposed financial structure of the expanded deal reflects market-based valuation principles while providing appropriate risk-sharing mechanisms. The additional 325 million euro investment, combined with the potential 100 million euro performance bonus, would bring Lufthansa’s total investment to approximately 750 million euros for 90 percent ownership. This valuation framework reflects both the strategic value of the Italian market and the operational improvements demonstrated by ITA Airways under the initial partnership arrangement.

Conclusion

The potential expansion of Lufthansa’s stake in ITA Airways to 90 percent represents a transformative development in European aviation that validates the success of the initial partnership while setting the stage for deeper integration and enhanced competitive positioning. The remarkable financial turnaround achieved by ITA Airways, including its first-ever positive EBIT of 3 million euros in 2024, demonstrates the effectiveness of the strategic partnership and provides confidence for expanded investment. The operational improvements, enhanced customer services, and successful network integration accomplished during the initial phase of partnership create a strong foundation for majority control and deeper strategic alignment.

The regulatory framework established for the initial acquisition provides important competitive safeguards while enabling the synergies necessary for success in the competitive European aviation market. The acceptance of EasyJet, IAG, and Air France-KLM as remedy takers ensures continued competitive alternatives while allowing Lufthansa and ITA Airways to realize the full benefits of their partnership. This balanced approach demonstrates the viability of airline consolidation within appropriate regulatory frameworks that protect consumer interests while enabling industry efficiency improvements.

FAQ

Question: Why is Lufthansa interested in increasing its stake in ITA Airways?
Answer: Lufthansa sees strategic value in expanding its presence in Southern Europe, leveraging ITA Airways’ growing profitability, and integrating the Italian carrier into its broader network for operational synergies and competitive positioning.

Question: What regulatory measures were required for Lufthansa’s initial acquisition of ITA Airways?
Answer: The European Commission required Lufthansa and the Italian government to implement remedy packages, including asset transfers, slot allocations, and cooperation with competitor airlines, to ensure continued competition on key routes.

Question: What benefits do passengers gain from the Lufthansa-ITA Airways partnership?
Answer: Passengers benefit from expanded codeshare routes, integrated loyalty programs, improved lounge access, and enhanced connectivity across the combined network of both carriers.

Sources: Reuters, Lufthansa Group, ITA Airways