The proposed investment provoked close scrutiny from competition regulators. Credits: Bloomberg/GettyImages

German airline Lufthansa‘s $356m investment in Italian state-owned airline Alitalia is close to being finalized after the airline resolved its differences with the Italian government, reported Bloomberg.

In May 2023, the two airlines agreed that Lufthansa would pay $356m for a 41% stake in Alitalia. While this was approved by the Italian government, who was eager to offload an asset that has become a drain on limited resources for years, the deal still had to be approved by the EU Commission for Competition. 

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The EU expressed worries over preserving competition in the airspace, particularly for long-haul flights. While Alitalia has been unprofitable for a long time, it functions over Italy which is one of Europe’s most competitive aviation markets.

The review process has been contentious, at times putting into question if the transaction would be approved. However, Lufthansa’s CEO Carsten Spohr was optimistic that the deal would go through.  

On Monday (November 11), the Italian government said it had presented the EU with a set of solutions for their concerns on the deal. This came after the Italian Economy Ministry rejected the German airline’s request to adjust the acquisition price, since Alitalia had lost value since the original agreement was made in 2023.

Offloading the airline will come as a relief to Italian Prime Minister Georgia Meloni whose pro-business government aims to meet a €20b ($21b) privatization target.  

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Alitalia has started the process of collective dismissal for its remaining 2,059 employees, company administrators told unions.