ITA Airways becomes Lufthansa's great hope amid industry storm

Lufthansa is betting heavily on ITA Airways, its new Italian subsidiary, to boost group profits, with initial successes already evident. The German airline group is increasing its stake in ITA Airways, aiming to acquire 90% ownership. This move comes after ITA Airways, which replaced the defunct Alitalia, reported its first net profit in three decades for the year 2025. Alitalia, a state-owned carrier plagued by financial issues, strikes, and poor service, ceased operations in October 2021, leading to the launch of ITA Airways as a leaner startup. Lufthansa initially took a 41% stake in ITA Airways a year and a half ago.

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Ita Airways is lean, the speed is sometimes high, and the flexibility is there. Compared to German companies, you can improvise and plan well in Italy.

Lufthansa CEO Carsten Spohr anticipates that ITA Airways will become the second-highest profit contributor within the group, after Swiss International Air Lines. The group aims for an operational return of 8% from its new Italian subsidiary. However, the airline industry is currently facing significant headwinds. Rising kerosene prices, fuel supply shortages, and geopolitical tensions, including the conflict in Iran, are creating a volatile environment. Despite these challenges, the integration of ITA Airways into the Lufthansa Group is progressing. Since April, ITA Airways has been part of the Miles & More frequent flyer program and the Star Alliance.

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They have competencies that we need.

Jörg Eberhart, CEO of ITA Airways, expressed optimism about the airline's prospects, highlighting its lean structure, speed, and flexibility. He noted that Italian companies often demonstrate a greater capacity for improvisation and planning compared to their German counterparts. Many of ITA Airways' 5,500 employees are former Alitalia staff, bringing valuable experience in areas like alliance management, pricing, and network planning. Eberhart acknowledged that training new pilots and cabin crew would have been time-consuming. However, the airline has faced internal challenges, including a strike called by unions in December demanding a more ambitious strategy and a 20% pay increase. Eberhart has responded by adjusting plans, emphasizing the significant growth opportunities in Rome's long-haul market, which is expanding at twice the rate of the rest of Europe. The number of long-haul aircraft is projected to increase from 22 in early 2025 to 30 by 2030. Eberhart also stressed the need for wage moderation, stating that while ITA Airways should not be a low-cost carrier, production costs are a factor when allocating new capacities within the group. He has also implemented management changes, replacing half of the first leadership tier with individuals experienced in other industries and privately-owned companies to enhance agility.

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Rome is growing in the long-haul business twice as fast as the rest of Europe, averaging six percent annually. This only happens in Asia otherwise. These are opportunities that we should definitely seize.