.jpeg)
Facing challenges such as elevated costs and delays in Boeing aircraft deliveries, Lufthansa CEO Carsten Spohr stated on October 1 that further investment in international growth, including the acquisition of a 41% stake in ITA, is vital for rejuvenating the struggling Cologne-based airline.
However, the future of ITA is significantly dependent on the developments at Rome's primary airport. Fiumicino is currently awaiting approval from the Italian airport authority, ENAC, to increase its capacity to 100 million passengers per year through the construction of a third terminal and additional runway space.
"One of the key factors that motivated our investment in ITA Airways was the potential of Fiumicino. It stands out as one of the few European airports with room for expansion in both terminal and runway facilities," Spohr remarked in July, highlighting the airport's strategic importance as a gateway to Africa and Latin America.
Aeroporti di Roma (ADR), which manages Fiumicino, is owned by the infrastructure group Mundys, led by the Benetton family and the equity firm Blackstone. In 2021, the airport operator submitted an 8-billion-euro development proposal to ENAC, which is still under review.
Nevertheless, some industry analysts are skeptical about Lufthansa's emphasis on Fiumicino. Ruxandra Haradau-Doser from HSBC noted, "They have pinpointed Rome as a hub for Latin America, but ITA is not as well-positioned as TAP from Portugal or Air Europa from Spain."
ENAC did not respond to a request for comments regarding the approval process, and ADR also refrained from commenting on the matter.
A spokesperson for Lufthansa emphasized that the success of ITA is not solely reliant on the performance of the Roman airport but also on the dynamics of the Milan region in northern Italy.
RELAUNCHING ITA
Federico Maria Alberto Caligaris, an equity partner at the advisory firm CDI Global, notes that concentrating on Fiumicino is a strategic move, especially as Lufthansa struggles to expand its other hubs.
Andrea Giuricin, CEO of TRA Consulting, a transport advisory firm, forecasts that the airport, which served over 40 million passengers in 2023, is likely to surpass the 50 million mark next year, driven by robust intercontinental and tourist traffic to Italy's capital.
The airport's efficient business model is also appealing: last year, operating costs represented 60% of 2023 revenue, compared to approximately 74% in Frankfurt, as reported by Reuters.
According to Giuricin, the cost per passenger for airlines operating medium-range aircraft at major European airports is between 30% and 90% higher than at Fiumicino.
"Fiumicino is also more economical for intercontinental flights: Frankfurt's costs are nearly double, with general fees ranging from 35% to 75% higher," he stated.
Fiumicino, where travelers can admire ancient Roman statues and paintings in a corridor leading to a new boarding area that opened in 2022, was awarded Europe's best airport by the Airports Council International last year.
However, travelers believe there is room for improvement in expanding the airport and enhancing train connections to Rome, located about 30 km away.
"The airport is nice and well-designed, but I would expect a larger facility for a city like Rome," remarked Brazilian tourist Felipe Paiva as he passed the Temple of Hadrian in central Rome. "And the transport options to the city could definitely be better."
UNCERTAINTIES
Lufthansa's lack of control over Fiumicino's expansion complicates its investment in ITA, especially considering the challenges faced by its predecessor, Alitalia, which experienced multiple bankruptcies. Rising labor costs have compelled the German airline to issue two profit warnings this year, with analysts and investors cautioning that Spohr's investment in ITA may not be a guaranteed solution.
The proposal appears reasonable and logical at first glance; however, there are risks associated with its implementation, according to Ingo Speich, head of sustainability and corporate investment at Deka Investment, which holds shares in Lufthansa.
Some analysts emphasize that while Rome serves as a significant center for inbound leisure travel, it is not the most ideal location for primary business travelers.
James Halstead, an aviation analyst, remarked that Italy's primary airport hub should ideally be in Milan, where economic activity and influence are concentrated, although it lacks political support.
A government source close to Prime Minister Giorgia Meloni, who requested anonymity, informed Reuters that the right-wing coalition does not oppose further expansion at Fiumicino Airport.
The source also noted that Milan's main airport, Malpensa, has a well-rounded mix of airlines and would continue to play a vital role even with Fiumicino's growth. However, its proximity to Lufthansa's key German hubs in Frankfurt and Munich could pose challenges in the future.
Halstead pointed out that "Rome is not particularly well-suited as a hub for the rest of Europe." He acknowledged potential opportunities for connections to South America, given the interest from the Italian diaspora in Argentina and Brazil, but noted that it is somewhat out of the way for attracting significant traffic.