June 7, 2023

Lufthansa handles some cargo for ITA Airways ahead of pending deal


MIAMI — The air logistics arm of Deutsche Lufthansa AG has started providing cargo handling services in the U.S. to ITA Airways under a contract unrelated to the German flag carrier’s pending investment in the Italian carrier and will collaborate on moving shipments worldwide once the deal closes, Lufthansa officials said.

Lufthansa last month reached agreement with the Italian government to acquire a 41% stake in ITA Airways, previously known as Alitalia, for $349.4 million. The deal, which is subject to regulatory review, gives Lufthansa the opportunity to acquire the remaining shares of the company at a later date.

The two carriers said they will begin immediately cooperating on sales and operations when the acquisition is finalized, essentially making ITA Airways the fifth network carrier in the Lufthansa Group (DXE: LHA) along with Lufthansa Airlines, Austrian Airlines, Brussels Airlines and Swiss International Air Lines.

That partnership will include cargo, new Lufthansa Cargo CEO Ashwin Bhat confirmed Tuesday.

“Obviously, as being part of the Lufthansa Group, and running the cargo business within the group, we will also interact, collaborate and see what the possibilities are of working together in the structure” once discussions are allowed, he said in an interview at the Cargo Network Services conference here.

Lufthansa Cargo manages the belly cargo for Lufthansa and all sister airlines besides Swiss.

Stephanie Abeler, vice president for the Americas, told FreightWaves that Lufthansa recently started operating cargo warehouses on ITA Airways’ behalf at Washington-Dulles International Airport, JFK Airport in New York and Los Angeles International Airport. ITA is outsourcing the cargo handling for widebody passenger aircraft to Lufthansa under a stand-alone contract executed before Lufthansa’s agreement to purchase ITA shares. 

The interview took place in Lufthansa’s suite where officials hosted a series of meetings with customers and service providers.

Lufthansa Cargo operates 16 Boeing 777 freighters on long-haul routes and two Airbus A321 converted freighters for same-day e-commerce customers within Europe. Eleven aircraft are operated by Lufthansa Cargo crews under the Lufthansa Cargo brand. Five aircraft are chartered from AeroLogic, a joint venture with DHL, and operated by AeroLogic on behalf of Lufthansa Cargo. 

Lufthansa’s cargo subsidiary generated $4.9 billion in cargo revenue last year and a $1.7 billion operating profit.

Bhat was promoted in mid-April from chief commercial officer to lead Lufthansa Cargo, after Dorothea von Boxberg was reassigned as CEO of Brussels Airlines.

Italian market access

Lufthansa beat out a consortium that included Delta Air Lines, Air France-KLM and an investment group for a piece of ITA Airways. The Italian government wanted to reduce its control of the airline, which started operations in late 2021 with less than half of troubled Alitalia’s fleet.

Italy is Lufthansa’s largest foreign market after the U.S. Lufthansa carried more connecting passengers from Italy to the U.S. than traveled directly from Germany to America. Italy is the third-largest economy in Europe and a large exporter. 

“As a young company with a modern fleet, and with its efficient and expanding hub in Rome, ITA is a perfect fit for Lufthansa Group. In Milan, ITA serves a strong catchment area which also offers potential for growth,” Lufthansa CEO Carsten Spohr said in a May 25 statement announcing the acquisition. “As part of the Lufthansa Group family, ITA can develop into a sustainable and profitable airline, connecting Italy with Europe and the world. At the same time, this investment will enable us to continue our growth in one of our most important markets.”

ITA has 66 Airbus aircraft and plans to have 97 by 2027.

Lufthansa said it plans to develop Rome as a southern hub for the group, saying it is well situated for expanded service to Africa, North America and Latin America.

ITA will remain a stand-alone airline, but integration into the Lufthansa Group will enable it to capitalize on the partner network, central revenue management, and Lufthansa’s global sales and marketing channels.

ITA has lost market share to European low-cost carriers such as Ryanair and Wizz Air, but Lufthansa appears more interested in ITA’s long-haul capabilities.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

Write to Eric Kulisch at [email protected]


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