Italy sets course for ITA Airways stake sale, likely to Lufthansa -sources

Italy's Prime Minister Giorgia Meloni on Wednesday approved a decree to sell an initial minority stake in ITA Airways with the final aim of facilitating the full privatisation of the state-owned carrier, three government sources told Reuters.

Italy's Prime Minister Giorgia Meloni on Wednesday approved a decree to sell an initial minority stake in ITA Airways with the final aim of facilitating the full privatisation of the state-owned carrier, three government sources told Reuters. Germany's Lufthansa is the frontrunner to enter the company's capital, the sources have said, with one adding it could buy a minority stake through a capital increase.

Lufthansa and ITA declined to comment on the government's move, but ITA Chief Executive Fabio Lazzerini on Wednesday said talks with the German company were ongoing "in a very collaborative way". The previous government of Mario Draghi had laid out a first privatisation decree in February, under which the Treasury was bound to immediately sell a majority stake in the carrier, so a new scheme was needed to change the process.

One of the sources said the government's move was aimed at accelerating the sale and Rome would closely scrutinise the industrial plan the buyer would put forward for ITA. The privatisation of the carrier, which officially replaced loss-making Alitalia in 2021, has proved a headache for the Treasury.

Under a deal with the European Union, Italy could still inject some 250 million euros ($265.4 million) into ITA by 2023. Industry sources estimate ITA, which last year posted an operating loss of 170 million euros, to be worth around 500 million euros.

"We are looking for a partner to make ITA work," Economy Minister Giancarlo Giorgetti was quoted as saying by his staff during discussions on ITA at the cabinet meeting. An exclusivity period of talks with U.S. private equity fund Certares, Air France KLM and Delta ended in October without producing any deal, leading to the reopening of the process.

Lufthansa had initially partnered with shipping group MSC to bid for ITA, but MSC said last month it was no longer interested in the transaction. ($1 = 0.9419 euros) (Additional reporting by Christina Amann in Berlin; Editing by Kirsten Donovan)