Lufthansa acquired a 41% stake in ITA Airways last month.
Lufthansa has said that its acquisition of a minority stake in Italian flag carrier ITA will present “attractive opportunities” for Lufthansa Technik.
Management added that Lufthansa Technik would be ITA’s preferred vendor for its full portfolio of MRO services.
One reason for this is that ITA did not inherit most of Alitalia’s maintenance business in order to ensure what the European Commission termed “economic discontinuity” between the two airlines and, as a result, not leave ITA liable to repay any of Alitalia’s illegal state aid.
What impact this has on the business of Alitalia Maintenance, which was acquired by Italian MRO provider Atitech in 2022, remains to be seen.
Lufthansa will pay €350 million ($374 million) for a 41% stake in ITA, and has agreed to a mechanism whereby it may acquire the Italian airline in full in the “medium term.”
Certainly, ITA’s all-Airbus fleet of 66 aircraft puts it squarely within Lufthansa Technik’s capability list, while further opportunities for maintenance should accrue as ITA builds toward Lufthansa’s goal of 94 aircraft by 2027.
This should make Lufthansa Technik an even more attractive target for potential investors. This week Reuters reported, citing sources, that bidders for a minority stake in the MRO company had narrowed to private equity firms Advent International and Bain Capital.
The newswire also reported that the partial sale process would enter its second phase in mid-June.
In 2021, a consortium led by Bain Capital Private Equity agreed to pay Rolls-Royce roughly $2 billion for 100% of Spanish engine component manufacturer ITP. Bain also owns Virgin Australia, and is now considering an IPO for the Australian carrier.
Another private firm, Apollo Global Management, is investing up to $1 billion in Air France-KLM via the airline’s aftermarket operations.
Earlier this year the airline group entered exclusive negotiations with Apollo for the latter to invest €500 million into a dedicated operating affiliate of Air France that owns spare components.
This financing would be non-dilutive, structured through a quasi-equity financing instrument, similar to the one raised by Air France on a pool of spare engines in July 2022.
In that transaction, Apollo-managed funds subscribed to €500 million of perpetual bonds issued by an ad hoc operating affiliate of Air France-KLM that owns spare engines.
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