October 30, 2018 / 5:35 PM / in 18 days

Italian state railways says will bid for Alitalia, other firms back off

ROME (Reuters) - Major companies on Tuesday ruled out involvement in a new rescue of Alitalia, complicating a plan led by Rome in which state-controlled railway Ferrovie dello Stato (FS) IPO-FERRO.MI will bid for the airline and look to bring in partners.

FILE PHOTO: An Alitalia Airbus A320-200 airplane approaches to land at Fiumicino airport in Rome, Italy October 24, 2018. REUTERS/Max Rossi/File Photo

Alitalia was put under special administration last year, leaving the government once again seeking a buyer to save the carrier. It will be the airline’s third rescue in a decade.

FS said its board had decided to put in an offer to buy Alitalia, but gave no further details.

A source close to the deal had earlier told Reuters that FS’s bid would only be a “transitional phase”.

The source added the deal would be completed in two separate steps, with FS picking up Alitalia on set conditions and then, at a later stage, being joined by an Italian partner and a international one, from the airline sector.

The source said there was very little visibility on the next steps, and it was not clear which partners would join FS.

“The situation is very messy,” the source said.

Earlier this month Deputy Prime Minister Luigi Di Maio suggested that state-controlled companies like oil major Eni (ENI.MI), postal operator Poste (PST.MI) and defense group Leonardo (LDOF.MI) could all play a role in the relaunch.

Di Maio, also industry minister, said that there were many private investors also interested in Alitalia.

But on Tuesday Eni said that any suggestion that it might pick up a stake in the carrier was “groundless” and that it would not play a role in the rescue, a spokesperson said.

Leonardo too will not join any relaunch of Alitalia, which has already accumulated a loss of over 300 million euros ($340.86 million), a separate source close to the matter told Reuters.

“It would be crazy for Leonardo to enter this madness,” the source said. Shares in the group were down almost 1.5 percent at 1600 GMT after Italian dailies had reported that the company would be involved in an effort spearheaded by FS.

Last month Poste Chief Executive Matteo del Fante said the group was “not at all interested” in joining an overhaul effort for the airline.

CASH DRAIN

Alitalia has cost Italian tax payers almost 10 billion euros over the last 20 years, more than the market capitalization of Air France-KLM, Turkish Airlines, Norwegian Air, Finnair and SAS added together, according to Andrea Giuricin, CEO of transport advisory firm TRA Consulting.

Last year Alitalia accounted for only 8.5 percent of the international traffic to and from Italy, Giuricin added, just under a third of Ryanair’s share.

The sale process was delayed due to the change of Italian government earlier this year, but the ruling coalition, that comprises the anti-establishment 5-Star Movement and the far-right League, pledged it would close a deal by Wednesday.

Germany’s Lufthansa (LHAG.DE) said earlier on Tuesday that it had no interest in participating in a government-led restructuring effort.

Alitalia must pay back the Italian state almost 1 billion euros in a bridge loan and related interest by mid-December.

Reporting by Giulia Segreti, additional reporting by Stephen Jewkes and Francesca Landini in Milan, Editing by Alexandra Hudson and Crispian Balmer

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