The Italian government and Lufthansa probably imagined things differently: There will be no quick takeover of Ita Airways by the Kranich Group because the EU Commission has initiated an in-depth investigation.

Just a few weeks ago, Lufthansa was confident that the green light would be given before the end of 2023. The German aviation group initially wants to get in with 41 percent and then increase it to 100 percent over a few years. During the preliminary proceedings, the European competition watchdogs made it clear that the transaction would not be approved without conditions.

What may also make things more difficult is that Brussels has a lot of experience with Lufthansa taking over airlines. Requirements that were imposed in the past, for example in the case of Austrian Airlines, did not have the desired effect, because a monopoly of the Kranich Group and high prices continue to dominate on the affected routes. The approval of state aid that Germany had granted also blew up in the court of the European Union. The ECJ, as the highest court, has not yet made a final decision.

Nevertheless, various events may have led to the EU Commission taking a closer look at takeovers in the aviation sector. In the past, there was a tendency to wave things through or to impose only minimal requirements, which only had a very short-term effect. It has been leaked that Brussels could demand significant concessions from the Lufthansa Group in order to join Ita Airways. Among other things, we are talking about giving up valuable slots in Milan-Linate as well as giving up take-off and landing rights in Frankfurt, Munich and Rome Fiumicino. The latter should explicitly affect transatlantic traffic, which seems downright unacceptable for Lufthansa, because the routes are considered the group's cash cows.

Italy's Finance Minister Giancarlo Giorgetti said in a speech in parliament, among other things, that the impasse is not good news for Ita Airways. The background to this is that the carrier being sold is financially weak and could possibly require further follow-up financing if the financial resources promised by Lufthansa cannot be brought into the Italian carrier in a timely manner. The Kranich Group actually wanted to begin integrating it into the group in January 2024. Nothing will come of this – at least for the time being.

Lufthansa and Ita Airways officially registered the deal comparatively late. A kind of preliminary procedure was carried out beforehand. The applicants probably expected that the actual examination could then be carried out more quickly. The EU Commission initially had until January 15, 2024 to decide whether the planned takeover would be approved, if necessary subject to conditions and/or concessions, or whether a phase II review process would be initiated. The latter option was chosen. The competition watchdogs now have 90 days to make a decision or respond to any offers of concessions. However, it is possible that the procedure can be extended to 180 days with appropriate justification.

The outcome is still completely open, because not only the long history at Lufthansa, but also that of Ita Airways should give reason to take a very close look. Ita Airways' predecessor, Alitalia, was repeatedly kept in the air with state funding. Some grants were subsequently declared illegal and repayment was ordered. But since Alitalia is insolvent, it is unlikely that any money will ever flow back. The sum of all factors may have contributed to the EU Commission taking a particularly close look. Calls from trade unions to speed up the process have not had the desired effect in Brussels.