Lufthansa and MSC consider taking majority stake in Alitalia successor

Germany’s Lufthansa and Swiss-Italian shipping conglomerate MSC have expressed an interest in acquiring a majority stake in ITA Airways, the successor to bankrupt Alitalia, in a sign of how the coronavirus pandemic could reshape the European aviation industry.

Geneva-based MSC said on Monday it aimed to create a partnership with the Italian government, which fully owns ITA Airways, alongside Lufthansa, setting off a period of 90 days for exclusive negotiations.

MSC, the world’s largest container shipping group, added that the deal would help it expand into air cargo, a sector that has thrived during the pandemic while strengthening the Frankfurt-based airline’s network in Europe.

ITA said MSC and Lufthansa had asked for Italy’s government to maintain a minority stake in the airline. The German carrier confirmed the partnership with the shipping group without offering further details.

The approach to the Italian government came after ITA Airways flew its maiden flight in October, after emerging from the rubble of bankrupt 75-year-old Italian flag carrier Alitalia following years of losses and state-backed rescues.

Rome took control of Alitalia in 2020 after attempts to find a private buyer failed as the pandemic ripped through global aviation. ITA took over the Alitalia brand for just €90m, far short of the original €290m asking price.

Italy’s government has said the new carrier will have to be profitable by 2025, something Alitalia failed to achieve in the 21st century.

From the outset, ITA chair Alfredo Altavilla said the carrier would need to do a deal with another airline to give it the scale to compete with big European carriers.

He told the Financial Times on Monday that the potential deal with Lufthansa and MSC was a “very compelling solution” for ITA.

“It’s a great opportunity for us to expand into the cargo business, and Lufthansa is a great solution for our passengers,” he said.

Some airline executives and analysts have predicted a wave of consolidation as the industry emerges from the coronavirus crisis, and a partnership between Lufthansa and ITA would provide striking evidence of how carriers are positioning themselves for the post-pandemic world.

Lufthansa has grown from its origins as Germany’s national airline into a European air conglomerate owning five airlines, including the Swiss and Austrian flag carriers.

The group received billions in financial aid during the pandemic but has made significant progress in restructuring and returned to profit in its most recent quarter.

Under Soren Toft, who had been heir apparent at rival Maersk before joining MSC in December 2020, the shipping group has shifted its strategy from organic growth to dealmaking, entering talks in December to buy Bolloré Group’s ports and logistics business for €5.7bn.

Container shipping companies have reaped the benefits of sky-high freight rates, with profits exceeding those of Big Tech companies. That has triggered a swell of investment by ocean carriers in other transport assets including air cargo, ports and logistics providers.