The Lufthansa Group has reportedly upped the concessions it is willing to make to the European Commission over its planned purchase of a stake in Italy’s ITA as it continues to seek the EU’s approval.
The airline group has been working with the EU for years on the deal as it attempts to address the body’s concerns about the acquisition’s effect on competition, specifically on long-haul routes between Europe and North America.
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According to reports from Politico, while Lufthansa had agreed to concessions including holding part of ITA’s business separate for two years, the Commission has been seeking further allowances such as a 10-year agreement on the separation.
Lufthansa’s joint venture with United Airlines, which sees the two airlines work together on pricing, capacity, and scheduling, has reportedly been a point of contention as the EU seeks a way of separating the German company’s revenue share from the deal to calculate its market share.
The new offers from Lufthansa continue the tense discussions between the two organisations after the Commission voiced its concerns about the partial ITA acquisition in a preliminary report.
The EU’s approval has also brought out critical remarks from the Italian Government after Prime Minister Giorgia Meloni accused the commission of blocking a remedy that the country had put forward.
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By GlobalDataItaly’s concerns about the potential failure of the deal are likely tied to the fact that some industry experts have questioned ITA’s stability as a company going in to the future if the Lufthansa deal falls through.
However, insiders on the deal have told Politico that while exact details on Lufthansa’s recent concessions are not available, they are not optimistic about the deal as the EU’s decision becomes political, likely thanks to the pressure from national governments.
The scrutiny of the deal continues a trend in aviation regulation that has seen authorities across the globe raise their demands for mergers and acquisitions, with deals such as JetBlue’s proposed purchase of Spirit Airlines in the US falling through in the face of regulatory disapproval.
