The European Commission has postponed until July 4 the deadline by which it will review a "significantly improved offer of concessions" Lufthansa Group submitted on May 6 to quell Brussels' antitrust concerns about its bid for a 41% stake in Italy's state-owned ITA Airways (AZ, Rome Fiumicino).
This was confirmed to ch-aviation by a Lufthansa spokesman who said, "The revised package addresses the Commission's concerns regarding short- and long-haul flights and the concentration at Milan Linate airport" but did not disclose further details.
Three sources familiar with the matter told the Italian daily Corriere della Sera that the latest concessions entail Lufthansa and ITA Airways signing preliminary agreements with easyJet (London Luton) and Volotea (V7, Barcelona El Prat) to allow the two low-cost carriers to start short-haul connections between both Linate and Rome Fiumicino and central Europe to ensure healthy competition following the merger. The agreements - to be finalised after the EC approves the proposal - would allow easyJet and Volotea to open aircraft bases at Linate, while the Spanish airline would also open a base with two aircraft at Fiumicino.
Lufthansa and ITA would also give up 12 daily slot pairs at Linate - 24 flights in both directions - one more than the 11 initially planned. Six pairs would go to easyJet and Volotea each. The budget carriers would be able to choose the timings of the slots - mornings and late afternoons being the most valuable - but use them to guarantee connections between Milan and Lufthansa's European hubs.
ITA Airways and Lufthansa also propose selling between six and nine slot pairs at Rome Fiumicino. Volotea stands to gain the most from this arrangement, allowing it to add two more aircraft to Rome and begin service to Munich.
As part of the preliminary agreements, the low-cost carriers must ensure service for at least three years. ITA would refrain from launching certain routes to prevent monopolies such as Linate-Vienna.
As for intercontinental routes between Rome and North America, Lufthansa has reportedly agreed to keep ITA Airways' commercial activities separate from those of A++, its transatlantic joint venture with United Airlines and Air Canada. This would ensure continued competition on flights to the USA and Canada. A "monitoring trustee" would oversee the proper implementation of this agreement. Pending approval from Brussels, ITA would transition from Skyteam to Star Alliance. However, it is unclear whether it would be allowed to codeshare with United or Air Canada without antitrust authorisation.
Following Lufthansa's gradual acquisition of ITA Airways, starting with 41% and eventually reaching 90%-100%, the two parties would initiate the process for ITA's inclusion in the transatlantic venture. This process would require a minimum of 18 months for approval, contingent on the consent of three regulatory bodies (European, US, Canadian) and the implementation of additional remedies. As part of this strategy, Italy and Germany aim to sign "SPAs" (special prorate agreements) with rival carriers like Air France, KLM Royal Dutch Airlines, British Airways, and Iberia to alleviate Brussels' concerns regarding competition on long-haul routes.
The Italian daily La Repubblica reported that Lufthansa had pledged to wait two years before integrating ITA Airways on transatlantic long-haul flights.
Meanwhile, Italy's economy minister, Giancarlo Giorgetti, said he was optimistic the Commission would approve Lufthansa's bid. "I am confident. Otherwise I would not be doing this job. [...] Let's hope the referee will not make any mistakes," Reuters quoted him as saying in response to a question on whether EU antitrust chief Margrethe Vestager would give her approval to the deal.
The Commission rejected two previous remedy packages submitted by Italy and Lufthansa. Italy made a third offer two weeks ago following discussions between Giorgetti and Vestager.
