April 26, 2018 / 10:45 AM / 3 months ago

Italy's political instability further delays sale of struggling Alitalia

ROME (Reuters) - The sale of Italy’s struggling carrier Alitalia has been further delayed because of continued political uncertainty following March’s inconclusive elections, the industry minister said on Thursday.

FILE PHOTO: People walk in the Alitalia departure hall during a strike by Italy's national airline Alitalia workers at Fiumicino international airport in Rome, Italy July 24, 2015. REUTERS/Max Rossi

The out-going centre-left government had hoped to complete a sale by the end of this month, but Carlo Calenda told reporters Rome now expected to finish the process by the end of October.

The government also put back the deadline for repayment of a 900-million-euro (784 million pounds) bridge loan to Dec. 15.

The national airline entered insolvency proceedings in May 2017 and the state is talking to three potential buyers, but early optimism over the chances of a swift sale have evaporated as a result of the prolonged political deadlock.

“It’s clear that now we have to enter into a more intense phase of negotiations... which requires that there be a government that can express its preference with full legitimacy,” Calenda said.

The minister said that during the election campaign, parties had expressed different views about Alitalia’s future.

President Sergio Mattarella is holding consultations with Italy’s main political forces on forming a coalition but there is no sign yet of an end to the stalemate.

Once a symbol of Italy’s post-war economy, Alitalia has struggled to keep up with competition from both low-cost airlines and high speed trains at home.

With almost 12,000 employees, the government is seeking a buyer who will guarantee the airline’s survival without having to make big cuts to its staff.

EasyJet (EZJ.L) in April submitted a revised expression of interest in the firm as part of a consortium, while Lufthansa (LHAG.DE) submitted a document setting out its ideas for a “new” Alitalia.

Budget carrier Wizz Air (WIZZ.L), which said in January it would only be interested in the short haul business, has made an offer, a source close to the situation told Reuters. Wizz Air has declined to comment.

On Wednesday, Lufthansa said it would only pursue its interest in Alitalia if the airline is restructured after Italian daily Il Sole 24 Ore had reported that the German airline was expected to enter exclusive negotiations.

Complicating the landscape for Alitalia, EU antitrust regulators said on Monday that the airline may have benefited from illegal state aid in the shape of the bridge loans. Rome has denied that the funding was illegal.

Reporting by Massimiliano di Giorgio, writing by Giulia Segreti; Editing by Crispian Balmer

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