The German company indicates the beginning of 2024. Still issues to be resolved in Brussels, focus on the sale of slots
From the end of 2023 to the beginning of 2024: The timeframe for Lufthansa’s entry into Ita Airways is lengthening. On the day in which it announces record results and the best quarter in its history in terms of revenues, the German giant also indicates a new deadline for the acquisition of 41% of the Italian company. This is indicated by the CEO of Lufthansa, Carsten Spohr: “The dialogue with the European Commission continues, we expect it to be concluded at the beginning of 2024”, he says, commenting on the results as of 30 September. The “quality” of the EU process “is better than speed”, he underlines.
The lengthening of the times is certainly not good news for Ita, also given the worried reactions that immediately came from the unions. Spohr’s words are always eloquent, however. “According to our knowledge, Ita continues to suffer losses. For this reason, obviously, there is an urgency in this transaction not from our point of view but from that of Ita”, he notes. According to the words of the company’s top management, Ita now seems to be less in trouble compared to the bailouts of the old Alitalia.
Profit expected in the balance sheet for the end of 2024
In a meeting with the unions last week, Ita leaders reported that the airline has stopped “burning” cash for a few months and will end 2023 at substantial operating break even with cash of around 450 million having transported 15 million of passengers and having had revenues of approximately 2.5 billion euros. This will soon make it possible to obtain financing and open new credit lines. A profit result is expected in the balance sheet by the end of 2024. However, on the horizon there are dangers deriving from the geo-political situation connected to the various conflict zones, the slowdown of the global economy and uncertainties about the price of fuel.
And also for this reason longer times do not help the company with its ‘stand alone’ plan (waiting for Lufthansa), too small to compete with the large companies (from major to low cost), even if the growth plan continues of the fleet, with 82 aircraft at the end of 2023 and 95 at the end of 2024, and the opening of new lines including Toronto and Chicago for wide body aircraft and Dakar, Accra, Kuwait, Riyadh and Jeddah for the A321 neo.
Negotiation in December
In Brussels the work continues and, according to what we learn, we are in the phase of responding to the countless questions posed by the Competition Directorate. The acquisition of 41% of Ita Airways by German Lufthansa “has not been formally notified to the European Commission. We are in contact with the parties to discuss the transaction before its official notification”, says a spokesperson for the European Commission, confirming that the notification of the merger has not yet arrived from the Competition Directorate. “These pre-notification contacts are continuous – he adds – and are part of the standard process for the evaluation of a complex operation. If an operation constitutes a concentration and has a community dimension – he recalls – it is always up to the companies to notify it to the Commission”.
The month of December should be dedicated to negotiations on possible “remedies”, slot transfers or other measures decided by the EU Authority. Among the most delicate steps, under the lens of Brussels, there is precisely the risk of concentration and, therefore, limitation of competition. On the table there would be a request to cut some routes to North America and Asia from the two German hubs of Frankfurt and Munich.
Unions on alert
After Spohr’s words, the unions went on alert. “The urgency we have as a country system must be clear for Ita to find a balanced position within a large European group, to achieve levels of development, competitiveness and attractiveness worthy of a global carrier. Lufthansa’s offer represents ours a valid and concrete opportunity for this to finally happen and generate, through a significant increase in the fleet, the expected increase in hiring and a quality service for customers”, says the general secretary of Fit Cisl, Salvatore Pellecchia. “A further extension of the timing could call into question the start of the development phase of the company’s industrial plan and growth projects, essential aspects for the survival of the company on the market”.
There is also concern at Uiltrasporti: ”Losing the 2024 season due to the EU’s decision would be a mortal sin”, comments the national secretary of Uilt, Ivan Viglietti. ”The DG Competition, every time it deals with something that concerns Italy, first with Alitalia, and now with Ita, seems a bit cross-eyed to us and there is always some obstacle. When it comes to other European realities, see the acquisition of SAS by Air France, seeing it from here everything seems simpler and quicker”, Spohr said in the conference, answering a question about whether the relative improvement in the Ita during the summer allows Lufthansa to take more time to negotiate with the European Commission. “Regarding Ita, according to the law, we do not have a vision of the current economic accounts”, began the Lufthansa head. “We only read in the press that” the Ita managers “continue to take losses for granted” even if “in the statements of the current managers the situation” is “a little better than predicted and probably better
The acquisition of 41% of Ita Airways by German Lufthansa “has not been formally notified to the European Commission. We are in contact with the parties to discuss the transaction before its official notification”, says a spokesperson for the European Commission, confirming that the notification of the merger has not yet arrived from the Competition Directorate. “These pre-notification contacts are continuous – he adds – and are part of the standard process for the evaluation of a complex operation. If an operation constitutes a concentration and has a community dimension – he finally recalls – it is always up to the companies to notify it to the Commission”.
Record third quarter for Lufthansa
Record third quarter for Lufthansa. In the three summer months, the group’s total revenues increased by 8% compared to the previous year, amounting to 10.3 billion euros (previous year: 9.5 billion euros). “This made the third quarter the strongest quarter in the history of Lufthansa Group in terms of revenue,” the company notes. Lufthansa Group generated an operating result of 1.5 billion euros, the second best quarterly result in its history and an improvement of 31 percent compared to the adjusted EBIT of 1.1 billion euros in the same period last year. The adjusted EBIT margin for the third quarter was 14.3 percent (previous year: 11.8 percent). Net profit for the period increased significantly to 1.2 billion euros (previous year: 809 million euros).
We would like to thank our customers and Lufthansa Group employees for a record-breaking summer: with the highest revenues and profits ever achieved in a summer, including an operating profit of 1.5 billion euros in the third quarter alone. All airlines in our Group and Lufthansa Technik have contributed to this with double-digit profit margins.” This was declared by Carsten Spohr, Chairman of the Board of Directors and CEO of Deutsche Lufthansa AG, commenting on the results approved today. “At the same time time, employee satisfaction in our company has improved significantly compared to the pre-crisis record level. It is paying off that we have combined our successful multi-airline, multi-hub strategy with the strengthening of the private travel segment, setting the right strategic course. We have also made significant improvements in operational stability and regularity despite continued challenging conditions. This trend is the basis for meeting our premium and quality standards and those of our customers even more effectively in the future. Even if the geopolitical situation remains difficult, our booking prospects – underlines Spohr – give us reason to be positive, not only for an excellent result for the Group this year, but also beyond”.
Source-www.adnkronos.com