Business & Tech

Delta, EasyJet are in advanced talks for Alitalia revamp

Delta Air Lines Inc. and UK discounter EasyJet Plc are moving toward joining a rescue of bankrupt Italian flag carrier Alitalia.

The two foreign airlines are interested in potentially teaming up to run Alitalia with Italian state railway Ferrovie dello Stato, the companies said Wednesday. Ferrovie is taking the lead on the latest bid to revamp the Italian carrier, almost two years after the airline was placed in administration for the second time in a decade.

Discussions among the potential partners will focus on “the definition of the main aspects of the new Alitalia plan,” Ferrovie said in the statement.

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The clock is ticking for Alitalia as it burns through a 900 million-euro ($1 billion) state loan. The airline halved its loss before certain items to 154 million euros last year, according to union Uil Trasporti. Now Alitalia is seeking international partners to stay afloat in a market where fares are under pressure and industry consolidation has left it dwarfed by rivals.

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The Italian government stands ready to participate in establishing a “new Alitalia,” provided that the troubled airline’s forthcoming business plan is sustainable and meets European norms, Prime Minister Giuseppe Conte’s office said in a separate statement.

Italian Deputy Prime Minister Luigi Di Maio is scheduled to meet Alitalia’s unions Thursday in Rome, people familiar with the matter said.

EasyJet cautioned that there was no certainty the talks would lead to a transaction. The Luton, England-based company, Europe’s No. 2 discount carrier, once took on Alitalia in the lucrative market for flights between Rome and Milan before being repelled.

Delta confirmed it had submitted a nonbinding letter of interest to Ferrovie about “a consortium approach in a future Alitalia together with EasyJet.” Neither airline disclosed details of their possible roles in resuscitating the Italian airline.

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The foreign carriers are considering whether to jointly buy as much as 40 percent of Alitalia, the people said.

Delta, based in Atlanta, has used international partnerships and equity investments to expand its footprint without relying solely on its own fleet and resources. The company’s holdings include 49 percent of Virgin Atlantic Airways Ltd., 49 percent of Grupo Aeromexico SAB, and 3.6 percent of China Eastern Airlines Corp.

Air France-KLM Group, a former shareholder in Alitalia and now 10 percent owned by Delta, isn’t interested in joining the rescue, while Deutsche Lufthansa AG would be interested only if the Italian airline restructured first, daily newspaper Il Messaggero reported Tuesday.

State-appointed administrators have been running unprofitable Alitalia since 2017 after former shareholder Etihad Airways pulled the plug on funding and workers rejected a 2 billion-euro recapitalization tied to 1,600 job cuts from a workforce of 12,500.