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Italy mulls rescue of bankrupt Alitalia with Lufthansa help

Italy’s new government is considering taking control of bankrupt national airline Alitalia as part of a plan that would include a capital raise from Lufthansa, national news media reported Friday.

“Alitalia is moving towards the sale of assets first to the state and then to Lufthansa,” according to a report in La Repubblica daily.

The Italian airliner filed for bankruptcy in 2017, hurt by competition from budget fliers such as Easy Jet and Ryanair, and is now managed by government administrators.

Previous efforts to find possible partners, including Germany’s Lufthansa and US carrier Delta, have failed.

In May, Italy pledged to relaunch the airline, re-nationalising it and injecting at least three billion euros ($3.6 billion) as part of a broader economic rescue package in the midst of the coronavirus pandemic.

Brussels has been considering whether loans paid by Rome to prop up the loss-making airline represent unfair competition to other carriers.

On Friday, La Stampa newspaper reported that Alitalia head commissioner Giuseppe Leogrande had asked for an additional 150 million euros to keep the airline afloat.

He said he would need the additional funds to pay staff salaries for February, the newspaper reported.

The operation, envisaged by the government led by new Prime Minister Mario Draghi, would take place in three stages, according to La Repubblica.

Alitalia would first pass under the control of Cityliner, its low-cost subsidiary. Italy’s economy ministry then would take control of Cityliner, with its 70 aircraft and about 5,500 employees, after which Lufthansa would enter through a capital increase.

Under such a plan, loans granted by the state to Alitalia would be returned through Cityliner, satisfying the demands of Brussels, La Repubblica wrote.

Alitalia would need to exit, however, from the Sky Team alliance, which includes Air France-KLM and Delta Airlines, both airlines in serious financial difficulties. via Agence France-Presse

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