Talks between Lufthansa and the Italian Government for the German flag carrier to buy the Alitalia successor appear to be close to a conclusion.
Lufthansa plans to acquire a minority stake initially, with options to purchase the remaining shares at a later date.
Lufthansa’s motive for investing in ITA Airways is to increase its market share in Italy, which is its second-largest international market after the United States.
By cooperating with ITA Airways, Lufthansa could poach more market share in Italy from competitors, especially for long-haul service.
However, Lufthansa seems to ignore history which has not been favourable to airlines that buy a loss-making airline in the hope of affecting a turnaround.
The history of Alitalia which was on the verge of bankruptcy for years hardly inspires confidence.
Alitalia morphed into ITA Airways in October 2021 after years of the Italian flag carrier being kept on life support by the Italian Government.
ITA Airways suffered a massive loss of €486 million in its first full year of operation, so the jury is still out on whether the new airline can actually perform better than Alitalia.
Other airlines have tried to turn around Italian airlines, Etihad in the case of Alitalia and Qatar Airways in relation to the short-lived Air Italy.
Although Covid was a contributing factor for the latter, the history here has been of significant failure.
It has been widely reported that the negotiation will wrap up in mid-April.
Should the takeover proceed it will be fascinating to see if Lufthansa can succeed where everybody else has failed.