Trade Unions Urge Brussels to Approve Lufthansa’s €325m ITA Purchase

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Call for Rapid Approval of Lufthansa’s ITA Buy

Airline staff representatives have urged the European Union to swiftly approve Lufthansa’s €325 million purchase of Italy’s state-owned ITA Airways. This acquisition requires the green light from EU antitrust officials, who are concerned that the takeover might lead to higher prices and reduced choices for flights to central Europe and the US. The call for action comes as the decision deadline looms, adding pressure on Margrethe Vestager, the European Commission’s lead antitrust official.

Unions Advocate for Strengthening European Aviation

In a letter dated May 28 and signed by 11 aviation unions, including Germany’s ver.di and Italy’s ANPAC, union leaders emphasized the need for a “quick and positive decision” on the merger. They argued that approving the deal would demonstrate the EU Commission’s commitment to a competitive and robust European aviation industry. The letter also highlighted the importance of retaining tax revenues and jobs within Europe, particularly under the strain of EU environmental laws, Russian sanctions, and uneven market access.

Political and Economic Implications in Italy

The potential blocking of the Lufthansa-ITA deal has sparked political controversy in Italy. Transport Minister Matteo Salvini warned that such a move would be seen as a “hostile act” against Italy. The Italian government, through its economics and finance ministry, holds sole ownership of ITA Airways, which succeeded the financially troubled Alitalia in 2021. The situation remains tense as the European Commission evaluates the impact of the merger on competition and market dynamics.

EU Concerns Over Market Dominance

The European Commission has expressed concerns that the Lufthansa-ITA merger could reduce flight options between Italy and central Europe and give ITA a dominant position at Milan’s Linate airport. Additionally, the Commission fears that further consolidation might limit competition on long-haul routes to the US, Canada, and Japan. Antitrust officials are currently negotiating with Lufthansa to see if the airline can offer concessions, such as divesting certain services, to address these competition concerns.

Decision Deadline and Political Context

The European Commission’s decision on the Lufthansa-ITA deal is expected by July 4. This timing is politically sensitive, as Commission President Ursula von der Leyen seeks approval for a second term from EU leaders, including Italy’s Giorgia Meloni. At a press conference, Vestager confirmed that the case is “ongoing” and that officials are considering potential remedies. While outright prohibitions of mergers are rare, the Commission has previously blocked high-profile deals under political pressure, such as the Siemens-Alstom rail merger. Both Lufthansa and the Commission are yet to comment on the proposed remedies.

SOURCE: Ref Image from Bloomberg

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