Tria Cautions on Stake in Alitalia as League Backs State Role

(Bloomberg) -- Italian Finance Minister Giovanni Tria cautioned that the Treasury will consider taking a stake in struggling airline Alitalia SpA only if talks between potential investors produce a strong business plan.

Speaking to lawmakers in the lower house of parliament, Tria confirmed that talks are underway involving Delta Air Lines Inc. and U.K. discounter EasyJet Plc, with state rail operator Ferrovie dello Stato SpA heading a group of investors.

“No nationalization of Alitalia is being discussed, the solution for Alitalia can only be a market one,” Tria said. Any decision “will depend on the best strategy to protect the State’s position as a creditor.” The clock is ticking for Alitalia as it burns through a 900 million-euro state loan.

As the former flagship carrier battles to avoid liquidation, Delta and EasyJet may invest as much as 400 million euros ($452 million), according to people familiar with an initial draft of the plan. Delta and EasyJet may get up to 40 percent in a new company, the people said.

Ferrovie may end up with about 30 percent of the company, with the Italian Treasury taking a minority stake. Tria told parliament it was too early to quantify any Treasury stake in the company, which is under special administration.

In an earlier interview Dario Galli, deputy minister for economic development, said his rightist League party -- the dominant force in the populist coalition -- is backing a big role for the state in overhauling Alitalia although it opposes nationalization in principle.

“The League is against nationalization ideologically but here the state has a role to play -- as long as the state money is repayable,” Galli said at his Rome office. “This is a situation in which there is an industrial sector but liquidity is lacking, so a state role is acceptable.”

Efforts to salvage Alitalia are being spearheaded by Deputy Premier Luigi Di Maio of the anti-establishment Five Star Movement, the League’s partner in the fractious coalition. Di Maio, whose party has campaigned to save jobs at distressed companies across the country, is also minister for economic development.

“I imagine that in the end, people will ask not to repay the debt, which could be turned into a stake in the company,” said Galli, who declined to comment on the details of the rescue plan. “That depends on European Union rules of course.” Debt will not be carried over into the proposed new company, the people familiar said earlier this week.

“Alitalia needs an industrial partner which is involved in civil aviation but also increases economies of scale, reorganizing personnel and exploiting long-haul opportunities,” Galli said. Alitalia’s assets include its brand image, the domestic market and slots, especially for long-haul flights, he added.

Fellow Deputy Premier Salvini, who campaigned in last year’s general elections on the slogan “Italy First,” told RTL 102.5 radio Wednesday that his priority is getting people to Italy, in reply to a question on whether he agreed with the possibility of the state eventually owning 51 percent of the airline.

“What interests me is that people who want to get to Italy can get here, for us tourism is like oil for Saudi Arabia,” Salvini said. “I’m interested in people getting to Italy quickly, and that a flagship carrier is not sold or undersold to foreign companies who would of course then work in the interests of their countries.”

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