Italy to take full control of Alitalia as virus hits sale plan - report

FILE PHOTO: An Alitalia Airbus A330-200 airplane is pictured at Leonardo da Vinci-Fiumicino Airport in Rome, Italy, March 30, 2019. REUTERS/Alberto Lingria/File Photo

MILAN (Reuters) - The Italian government is close to taking full control of Alitalia, as the coronavirus outbreak in Europe was forcing it to abandon plans to find a buyer for the ailing national carrier, daily Il Messaggero said on Sunday.

According to the plan, which the report said was already at an “advanced stage”, the government would take control of both Alitalia’s aviation and land operations through a public vehicle, the report said, adding the plan would be implemented “in a short time”.

Rome had previously set a May 31 deadline to complete the sale of the loss-making airline, with potential investors asked to submit expressions of interest by March 18.

A source with knowledge of the matter told Reuters that Alitalia, which has been struggling for years, was running out of cash, despite an extra 400 million euro injection decided by Rome at the beginning of the year.

Alitalia was not immediately available for comment.

Transport Minister Paola De Micheli said this month the government wanted to accelerate the sale process following the spread of the virus, which has led to a collapse in air traffic.

As the crisis has worsened, the air transport industry has been hit hard across the world, pushing Rome to change its plans for Alitalia, Il Messaggero said.

Given the tough market conditions, the European Union is unlikely to oppose a state intervention in the carrier, which currently employs 11,000 people, the report added.

In a separate report, daily La Repubblica on Sunday said Rome was planning an immediate intervention in favor of the air transport industry worth 500 million euros ($555 million)followed by other measures worth 3 billion euros, which would help nationalize Alitalia.

Reporting by Giulio Piovaccari and Francesca Landini; Editing by Edmund Blair