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Rome Fiumicino seen as Lufthansa's new southern hub after ITA deal

FILE PHOTO: Germany's flagship airline Lufthansa holds the annual results news conference, in Frankfurt

By Angelo Amante

ROME (Reuters) -Lufthansa hopes to develop Rome Fiumicino as a southern hub for the group and will focus on long-haul flights from the Italian airport to Northern and Latin America, group slides said on Friday.

Lufthansa will buy a 41% stake in ITA Airways, the successor of former flagship carrier Alitalia, through a 325 million euro ($357.76 million) capital increase and is aiming to take full control of the airline in the future.

"We will also build on ITA's established strength on routes to Asia, Northern Africa and the Middle East," Lufthansa CEO Carsten Spohr told analysts.

Shares in Lufthansa were down 0.2% on Friday, a day after the airline and the Italian Treasury announced the ITA deal.

A report from TRA consulting firm says some 43 million people travelled through Rome Fiumicino in 2019, before the COVID-19 outbreak, and the airport has potential to become an even stronger hub for the Mediterranean area.

TRA analyst Andrea Giuricin said poor intercontinental connections are a persistent issue for Italian airports, as around 5.6 million travellers per year stop over at other European hubs before reaching their final destinations.

His report said this is due to the weakness of the national airline, and the integration of ITA into the Lufthansa group might help Fiumicino become an hub for travellers heading to the Americas.

The German carrier would also look to expand tourism in Milan Linate city airport, company slides showed.

"Lufthansa is facing a hard challenge with ITA, but it is proposing reasonable plans to win it," Giuricin told Reuters, adding ITA remains strong in Fiumicino and Linate but lost much of its business in the rest of Italian airports.

Lufthansa, which already operates the brands Swiss, Austrian Airlines and Brussels Airlines, said it would look to feed more passengers into Fiumicino airport.

Analysts believe Lufthansa has good chances to boost Fiumicino, after fostering development of other airports it entered after its previous takeovers.

A study from consulting firm AlixPartners shows that both Swiss and Austrian Airlines registered solid growth in their hubs in Zurich and Vienna since their full integration into the Lufthansa group, providing evidence that a multi-hub strategy can be effective.

"This is an example of what can happen in Italy and specifically Rome, where the growth in traffic can also come from the leisure touristic segment, especially from a stronger south-eastern Asian flows," AlixPartners Managing Director Michele Mauri told Reuters.

($1 = 0.9084 euros)

(Reporting by Angelo Amante; Editing by Andrea Ricci and Louise Heavens)