EU TRANSPORTATION: Lufthansa; leaks it will buy out remaining ITA (Corriere)
Sep-11 08:24
(LHAGR: Baa3/BBB-/BBB-)
We see it adding +0.4x onto Lufthansa's current 2.0x levered balance sheet as it consolidates ITA's debt load. The €325m in cash spend required is insignificant; capex guidance this year is at €2.7-3.3b with FCF net of it to be stable around last years €840m.
- Leaks are it will take its current 41% stake to 90% paying the same price as it did for the initial 41% (€325m) - with another €100m contingent on certain targets being reached.
- Lufthansa had this call option which it has said in the past it could exercise as early as this summer. ITA is a currently Italian Gov. owned airline.
- It is currently recorded as a equity investment - if it moves to 90% ITA financials will be fully consolidated:
- FY24 ITA did €3.1b in revenues, €337m in EBITDA (8% of LHAGR) & €3m in EBIT. Strong capacity driven growth across all last year.
- Net debt of €2.6b (mostly leases) - will add to Lufthansa's €8.1b debt load.
- It adds 11-12% in capacity to LHAGR with its 99 aircraft and 18m passengers/yr.
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