Buyer beware

14 February 2019 By Lisa Jucca Follow @LJucca

It’s like the start of a bad joke: Delta, easyJet and Italy’s railways walk into a bar and buy the national carrier. But there’s nothing funny about Alitalia’s serial cash incineration. Even if their goal is to thwart Lufthansa, the pain they’ll suffer isn’t worth the effort.

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Italy tries more state medicine to heal Alitalia

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Italy’s state-controlled railway Ferrovie dello Stato Italiane (FSItaliane) said on Feb. 13 it would start negotiations with U.S. carrier Delta Air Lines and British low-cost carrier easyJet to draft a rescue plan for struggling Alitalia. EasyJet, the third-largest airline player in Italy, confirmed the talks in a statement.

Alitalia was placed under special administration in May 2017 and subsequently put up for sale. The loss-making carrier is expected to post revenue of over 3 billion euros in 2018, one of the administrators in charge of the carrier said in December.

Deutsche Lufthansa, the continent’s biggest airline by number of passengers, in 2017 submitted a binding offer for Alitalia, which the Italian state rejected as it involved heavy layoffs.

The Italian government has lent Alitalia 900 million euros in bridge loans to keep it afloat during the sale process. The loans will have to be repaid in full to avoid breaching European Union state aid rules.

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