Ita-Lufthansa, toward the conclusion of a story that dragged on since 2008

Brussels – ITA-Lufthansa, an almost never-ending story to which the Commission is ready to put an end after months of negotiations, doubts, reservations, and under-the-radar talks. Brussels’ green light to the merger between the two airlines is a piece of a decades-long mosaic when the government in Rome tried to find a solution to the chaos of Alitalia, the national airline whose accounts had become unsustainable.

It was Romano Prodi, in 2008, as prime minister, who took the dossier into his own hands. He went close to selling off Alitalia to the Franco-Dutch of Air France-Klm. Opposition parties (then Forza Italia, Lega and Alleanza Nazionale) rose, accusing the premier of selling off the family jewels. In the end, nothing more was done about it. The Berlusconi government, also in 2008, created Compagnia Aerea Italiana (CAI) to enable the rescue of Alitalia, which, in return for not selling out to the French, received a €300 million bridging loan. The Commission challenged the deal, dragging Italy before the EU Court of Justice, which in 2013 did not condemn Italy. The same year, however, Italy decided to involve Poste in the rescue operation of Alitalia. Again, aid that did not appear to be in line with the rules was contested. Two years later, the Commission closed the investigation.

In the meantime, the Italian government notified another measure, namely the proposed sale of Alitalia to the Emiratis of Etihad, forcing the 12-star Antitrust Authority to return to the matter again. The go-ahead was given but conditional on selling up to 49 per cent of the shares. A deal that later failed. In May 2017, Alitalia was placed under extraordinary administration according to national bankruptcy law. Loans of €600 million were guaranteed to secure the company’s financing during the receivership, and another €300 million were added in October. A total of €900 million in aid: all on top of the €300 million in state aid that had already been guaranteed in 2008. 

At the end of 2017, the failure to sell the flag carrier to the French, followed by the decision to halt Romano Prodi’s plan, cost Italians €1.2 billion in bridging loans alone, plus layoffs. 

The new Alitalia, the one created by CAI, never took off. On the contrary, it proves increasingly unmanageable and unsustainable, so much so that in 2019, the government had to grant a new €400 million bridging loan, which, in March 2023, was rejected by EU antitrust because it was incompatible with state aid rules. This brings to €1.6 billion in government support since 2008 (of which 1.3 billion is to be recovered because it is illegal), again net of other operating and cash-injection costs.

Having retained control of the air carrier means having to deal with it. The general shutdown of the economy produced by the COVID-19 pandemic puts pressure on the civil aviation sector. Many European companies are in danger of closing due to the cessation of operations due to confinements and travel bans. ITA is no exception and needs €199.45 million in new state aid to avoid bankruptcy and damages. This time, Brussels authorised this aid without objection. After this operation, total state aid rose to €1.8 billion.

In November 2020, ITA Airways was created to replace a now loss-making company with a new one. The government struck a deal with Brussels in May 2021: it can buy the old Alitalia brand. The new company takes what remains of the old one. A formula by which they think they have finally run with the hares and hunt with the hounds. This is not the case. In the end, Italy decides to deprive itself, once and for all, of its national airline. The Commission’s decision to allow the wedding between ITA and Lufthansa could represent the word “end” to a 16-year-long story.