Ita Airways, Mef and Lufthansa: contracts with competitors sent to Brussels

Mef, Ita Airways and Lufthansa have reached agreement on the dossier to be sent to Brussels. The so-called remedies, the contracts with three competitor companies to which to entrust 13 routes against the risk of monopoly positions, were sent shortly before the deadline to the European Commission's Directorate-General for Competition. In a statement, the MEF explained that 'we confidently await the European Commission's final approval in order to proceed with the closing of the operation', adding that the 'economic conditions envisaged have not undergone any changes with respect to the agreement already signed'.

The deadline for sending the remedies to Brussels was set at 23:59 on 11 November, although the European Commission has leaked that it is willing to grant some flexibility on the terms. The problem is that every additional day of delay in sending the contracts risks lengthening the time of the closing, given that it will be necessary to wait for the verdict of the European Commission; this is the condition posed by Brussels to grant the green light to the entry of Lufthansa with 41% in Ita Airways.
The signature to the contracts was affixed by Ita and Lufthansa at the deadline of 4 November, while the Mef decided not to sign pending clarification with the Germans on the value of the investment and the interpretation of the contractual clauses: recourse to arbitration was also hypothesised. The clarification therefore arrived, and the Mef was also able to sign the contracts.

Let us take a step back and return to the casus belli. According to sources following the dossier, on 4 November, the Germans presented objections in the order of 60-70 million on the expected disbursement, a figure that would be the result of the lower value of Ita Airways at the time of its entry into the capital (31 December 2024) and of the investments considered to be higher than the estimates of the business plan (the cost of catering at Fiumicino was among the objections of the Germans): by entering with 41%, the request for a discount would have been around 25-29 million (but according to the Mef the figure could have risen). After this request was flatly rejected by the Mef, negotiations began to try to find an agreement without nullifying the entire operation. And the agreement was reached in extremis.

In the plans, Lufthansa's total investment amounts to €829 million; after the first tranche of €325 million that will be used to increase the capital of 41% of Ita Airways, the second tranche of €325 million will be allocated to the MEF, an earn-out clause of €100 million (if certain conditions are met) is then foreseen, and finally between 2028-2029 Lufthansa could exercise the option to purchase the remaining 10% for €79 million.

Entering into the merits of the contracts, the parties undertook with the European Commission to release to a competitor 15 pairs of daily slots at Linate and the entry of a competing carrier on a dozen intra-European routes that the two companies cover directly: the choice went to EasyJet. As for the EU Commission's request on the routes between Fiumicino and Washington, San Francisco and Toronto, the contracts signed facilitate indirect connections from other European hubs for Air France and British Airways.