Lufthansa Reaches $350 Million Deal for Italy's ITA Airways: Report

Lufthansa finally has a deal. For ITA Airways that is, and according to reports.

The Frankfurt-based carrier will initially buy 40 percent of the state-owned Italian airline for $343-354 million (€320-330 million), according to a report by Italian daily Corriere Della Sera. Lufthansa would invest a further $537 million to raise its stake in ITA to up to 95 percent at a later date. A final agreement could be signed as soon as Thursday.

The deal is the culmination of years of effort by Lufthansa to buy its way into the Italian market. The German carrier bid for a stake in ITA's predecessor Alitalia as early as 2008, only to be out maneuvered by Air France-KLM. In the latest round of dealmaking, Lufthansa was counted out last year when a Certares-led consortium of Air France-KLM and Delta Air Lines was selected as the preferred bidder. But that deal fell through and Lufthansa was back in the running by December; the group made an official offer in January. Air France-KLM has, meanwhile, shifted its interest to acquiring TAP Air Portugal.

Lufthansa Group CEO Carsten Spohr has described the group as the "natural home" for ITA. Italy is Lufthansa's largest market outside of its home markets, which include Austria (Austrian Airlines), Germany (Lufthansa and Eurowings), and Switzerland (Swiss Air). In May, Spohr said ITA's Rome hub could be an integral southern gateway to Africa and Latin America for the group.

Lufthansa and the Italian government will need to European Union antitrust sign off before any deal for ITA could close.