January 11, 2018 / 2:33 PM / 10 months ago

EXCLUSIVE-Lufthansa CEO calls for significant Alitalia cuts - letter

* Lufthansa CEO sees considerable work yet to be done

* Says “NewAlitalia” would have fewer staff, smaller fleet

* CEO comments in letter to Italian minister seen by Reuters (Adds further details from letter)

FRANKFURT, Jan 11 (Reuters) - Lufthansa sees a need for significant restructuring at Italy’s Alitalia before the German group would be prepared to buy the airline, according to a letter by Lufthansa Chief Executive Carsten Spohr seen by Reuters on Thursday.

“While recognising the valuable measures that have been undertaken to date... we strongly believe that there remains a considerable amount of work to be achieved before Lufthansa would be in the position to enter comprehensively into the next phase of the process,” Spohr said in the letter to Italian Industry Minister Carlo Calenda.

He said a restructured “NewAlitalia” would be smaller in terms of both staff and its fleet.

Alitalia, which has made a profit only a few times in its 70-year history, was put under special administration last year after staff rejected a plan to cut jobs and salaries.

There was no immediate response from the Italian ministry or the airline itself.

Alitalia has around 9,200 full-time staff, plus a further 1,600 in a state-backed temporary layoff scheme. Any permanent job cuts would be particularly sensitive ahead of a national election in March.

Lufthansa, British low-cost carrier easyJet and U.S. private equity fund Cerberus are among companies that have expressed an interest in Alitalia.

A source close to the matter had told Reuters in November that Lufthansa had offered 250 million euros ($300 million)to take on most of Alitalia’s fleet of aircraft and half of its staff.

Lufthansa had offered to keep around 90 to 100 Alitalia planes, down from a fleet of 123. It was not interested in Alitalia’s ground handling services.

Spohr said in the letter to Calenda that Lufthansa was willing to support the commissioners managing Alitalia in designing restructuring measures for Alitalia but was not in position to play a leading role in the process.

Lufthansa overhauled Ryanair last year to retake the crown as Europe’s largest airline by passenger numbers. ($1 = 0.8321 euros) (Reporting by Ilona Wissenbach; Writing by Maria Sheahan; Editing by Tom Sims and Keith Weir)

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