September 6, 2018 / 8:34 AM / 14 days ago

EasyJet still interested in Alitalia's short-haul business

LONDON (Reuters) - EasyJet (EZJ.L) is still talking to the Italian government over Alitalia’s short-haul operations but the head of the budget airline stressed on Thursday that any deal needs to make commercial sense.

An easyJet Airbus A320-200 airplane takes off from the airport in Palma de Mallorca, Spain, July 29, 2018. REUTERS/Paul Hanna

EasyJet, Germany’s Lufthansa (LHAG.DE) and fellow budget carrier Wizz Air (WIZZ.L) submitted expressions of interest this year for Alitalia or parts of its business, but the lengthy formation of a new anti-establishment government delayed the process.

EasyJet Chief Executive Johan Lundgren said any deal had to be strategic, had to be something the firm could handle operationally and had to make commercial sense.

“Those are the things we are looking for and those are the discussions we are having. And sometimes the discussions are progressing faster and sometimes they are progressing a little bit slower,” he said at the Aviation Festival industry event.

Earlier on Thursday easyJet also said Singapore Airlines (SIAL.SI) was joining ‘Worldwide by easyJet’, a service it launched last year to offer long-haul destinations without the need for costly and complex interline and codeshare agreements.

Closer to home, Lundgren said he had been reassured by both Brussels and London that at least a basic agreement would be in place to enable flights to continue after Brexit next March.

ITALIAN PARTNERSHIP

Alitalia, a symbol of Italy’s post-war economic boom but now struggling to compete against low-cost carriers and high speed trains, was put under special administration last year.

Italy’s previous government initiated a sale process, but the country’s new administration wants the majority of the loss-making carrier under state control.

Transport Minister Danilo Toninelli said in July there was a need for 51 percent of Alitalia to be kept in Italian hands “but with a strong investor next to it”.

However, the state-appointed commissioners who are running Alitalia said last month that three offers they had received were not appropriate, and they had not entered exclusive negotiations with any bidder.

“The government and the state would like to have a stake in there but that still leaves things open for potential other partnerships,” Lundgren told reporters. “So that’s what we are in discussions with them about.”

Under the Singapore Airline’s agreement, easyJet’s customers will be able to connect with Singapore’s flights via Milan Malpensa and with Singapore’s low-cost subsidiary Scoot via Berlin Tegel later this year.

Lundgren said 10 airlines, including Norwegian and WestJet, were now partners in the programme, and he was in talks with other carriers to join.

He also said easyJet was working on contingency plans to cope with Brexit and it wanted clarity on Britain’s future trading relationship with the European Union.

“We know regardless of what’s going to happen in terms of deal or no deal that there will be a bare bones agreement in place,” he said.

“That’s very clearly confirmed to us in the discussions we had both from Brussels but also from Westminster. It would be inconceivable there would be no flying between UK and mainland Europe.”

Editing by Keith Weir

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