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Alitalia rescuers to ask for another delay - sources

Alitalia rescuers to ask for another delay - sources
FILE PHOTO: Alitalia airplanes are pictured at Leonardo da Vinci-Fiumicino Airport in Rome, Italy, March 30, 2019. REUTERS/Alberto Lingria -
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ALBERTO LINGRIA(Reuters)
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By Francesca Landini

MILAN (Reuters) – Companies hoping to rescue Italian carrier Alitalia will ask for a deadline for presenting their plan to be extended as they are still negotiating key aspects, two sources familiar with the matter said.

Italian railway group Ferrovie dello Stato, which is leading an effort to take control of Alitalia, is expected to ask administrators running the carrier for a “substantial” delay to the Sept. 15 deadline, one of the sources said.

It would be the sixth delay since Ferrovie expressed its interest in investing in the carrier at the end of last year.

Ferrovie, infrastructure group Atlantia <ATL.MI> and U.S. carrier Delta Air Lines <DAL.N> have been discussing a joint plan for Alitalia for nearly two months, but they are at odds over highly-profitable North American routes, three sources familiar with the matter said.

The Italian partners in the consortium want Alitalia to have more freedom to expand its North American routes compared to what Delta is currently offering under a new cooperation agreement dubbed Blue Skies that it has set up with Air France KLM <AIRF.PA> and Britain’s Virgin Atlantic.

How Alitalia would share the revenue coming from North American routes with Delta and other partners in the Blue Skies alliance is also under negotiation.

“The role of Alitalia in the Blue Skies alliance is a point of contention,” one of the sources said.

Long-haul flights to the United States and Canada account for more than one third of Alitalia’s revenue and are considered key to reviving the Italian carrier, which was put under special administration in 2017 after workers rejected the latest in a long line of rescue plans.

Administrators appointed by Italy’s government have cut costs and renegotiated plane leasing contracts to make Alitalia more efficient, but the carrier still burns cash and had been kept afloat thanks to a 900 million-euro (805 million pounds) bridging loan granted by Italy’s treasury.

Alitalia had only 410 million euro left in its coffers in July and would need fresh funds by the end of the year when it is expected to post a loss, according to another source.

Delta and Ferrovie declined to comment.

(Additional reporting by Tracy Rucinski in Chicago; Editing by Alexandra Hudson)

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