How much will the EU stakes cost Ita and Lufthansa?
What happens to the Ita-Lufthansa dossier? And what is Brussels up to? Facts, numbers and analyst Spazzali's comment
Decisive days for the future of Ita and the alliance with German Lufthansa.
There are only a handful of days left and then the European Commission should receive the response from the MEF and Lufthansa on the Statement of Objections sent to the parties last March 25th.
Here are facts, numbers and insights.
THE STAGES OF THE ITA-LUFTHANSA ALLIANCE AND THE ROLE OF BRUSSELS
The EU had given a month to respond to the comments made on the acquisition by the German carrier of a minority share of Ita Airways but it seems that both the MEF and Lufthansa want to speed up the process and therefore the response to Brussels should starting from the headquarters in Frankfurt already by the end of next week.
Europe has raised a series of objections to the marriage between ITA and Lufthansa, almost all linked to overlapping routes to and from Rome Fiumicino, both by ITA and Lufthansa, which however do not exist in reality.
So the German carrier's response will most likely focus on the European routes, which are overlapping, in particular those that see the Italian capital and Milan Linate connect Munich, Frankfurt, Brussels, Zurich, Geneva, Dusseldorf, Hamburg, Vienna and Stuttgart.
It seems that Brussels fears that competition will be reduced on three lines of routes: the short-haul ones that connect Italy with the countries of central Europe, where the competitors are the low-cost carriers, such as Ryanair and WIZZ and which in many cases operate from more remote airports; the long-haul routes between Italy and the United States, Canada and Japan, considering the activities of Ita, Lufthansa and its partners belonging to the Star Alliance joint venture as if they were a single entity, and therefore together with United Airlines , Air Canada and All Nippon Airways, and that Ita's dominant position in the Milan Linate airport is created or strengthened.
After the Mef and the German giant have responded to the EU's objections, the fateful date is set for June 6th, when the Commission should rule on the German group's 325 million investment to acquire 41% of the capital of Ita just before the European elections.
This is why Lufthansa and the Mef have decided to send the response to the SO proposed by DG COMP well before the deadline in order to urge the Commission to provide a response before the initially set deadline.
SPAZZALI'S ANALYSIS ON ITA-LUFTHANSA
But how much would the remedies proposed by the European Union really cost ITA and Lufthansa?
Cristiano Spazzali, analyst and air transport expert, former general director of Azzurra Air and who has been following the ITA Airways dossier for some time now, responds to Startmag and who had already previously expressed great concern about the stakes set by the EU Commission on the ITA-Lufthansa marriage the anomalous slowness demonstrated by the Commission in managing the dossier.
Spazzali elaborated for Start Magazine the economic data of the routes put under the magnifying glass of the EU and the numbers are impressive to say the least: "The EU – explains Spazzali – calculated the costs of the remedies on the basis of the economic and traffic data of the years 2021, 2022 and only part of 2023. The economic data which is around 640 million euros, and which concerns the estimated turnover on the routes under investigation, in my opinion is correct in the calculation but incorrect in the reasoning."
Spazzali states that “Ita today is no longer the airline that operated a year ago, in fact in 2024 it will find itself operating new destinations both on the long-haul network but also in Europe with a significant increase in frequencies and a stabilization of those that it is already working. So the calculation should be done prospectively. That is, how much impact would these remedies have on the next 5 years and what impact would they have on the balance sheet of both companies?”.
In illustrating the data from his elaboration, Spazzali explains that only in 2024, assuming that Lufthansa and Ita agree to reduce the routes as requested by the EU, the overall impact in 2024 alone would be almost 900 million euros excluding taxes. A drain on any airline.
Spazzali adds: "Making hypotheses on how to divide this amount between the two airlines is not possible at the moment, as the management of ITA has not yet passed into the hands of Lufthansa and it is not known which of these remedies will actually be activated". Spazzali then concluded by stating that "There are certainly overlaps on European routes but on long-haul routes the EU absolutely cannot put the acquisition of ITA by Lufthansa and the involvement of the Star Alliance Joint Venture on the same level with other airlines belonging to the alliance. It is as if the government of the United States of America, following the merger between two American airlines, which operate flights to and from Italy in collaboration with ITA, were to ask ITA itself to abandon flights on routes with the USA because otherwise the merger could not take place. We hope that DG COMP will immediately backtrack on this specific point."
WHAT MSC SAYS
Soren Toft, CEO of the MSC Group, also spoke about the ITA-Lufthansa affair on the sidelines of the conference on "Future methods and challenges between network development and growing global instability" organized by the Lombardy Region in recent days as part of the G7 Transport Summit in Milan. , “Ita Airways is a closed chapter for us”. Toft declared: “Cyclically we read rumors in the press, which see us involved in this match, but now there is an operation with Lufthansa”.
RYANAIR'S THOUGHT
We must also note the position taken by Ryanair CEO Eddie Wilson, who recently declared to the press that in his opinion the merger between Ita and Lufthansa will take place, but that it will no longer bring connectivity to Italy, the CEO of Dublin company then declared that in his opinion the Germans will only limit themselves to taking passengers to Munich and Frankfurt.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/ecco-quanto-costeranno-i-paletti-ue-a-ita-e-lufthansa/ on Mon, 15 Apr 2024 06:10:21 +0000.