Thursday, June 20, 2024

Lufthansa ups its offer to try to win over EU on ITA deal

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Talks have centered on how to carve out Lufthansa’s revenue share from its joint venture with United Airlines, where it currently coordinates on price, capacity and scheduling, said one of the people, both of whom were granted anonymity to speak about confidential discussions.

The new offer is the last attempt to answer the Commission’s concerns, said the second person, who warned that they were “not too optimistic.”

Both people said that the decision now “has become political.”

Italy has lobbied hard for the deal to be cleared with Italian Prime Minister Giorgia Meloni saying in September that the Commission was blocking the solution her government had put forward. She said the issue was also “brought to the attention” of European Economy Commissioner Paolo Gentiloni, an Italian.

Lufthansa chief Carsten Spohr has been pushing hard to get the deal approved, pointing out that many observers think ITA cannot survive without the deal.

EU competition chief Margrethe Vestager warned the firms in May that officials could not clear the deal “if serious competition issues cannot be solved.”

Lufthansa is Europe’s biggest airline by revenue after buying up three smaller European airlines over the past 20 years. This has left a sour legacy. In the Brussels Airlines takeover, there were no takers for Lufthansa’s offer of airport takeoff and landing slots.

The Commission has since raised the bar on airline deals, warning that ceding slots isn’t an effective way of tackling problems especially now that pandemic-hit airlines are reluctant to enter new routes.

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