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Italy set to grant funds to keep Alitalia afloat - source

Kitco News

ROME (Reuters) - Italy is set to free up funds for loss-making airline Alitalia on Monday as Rome struggles to find investors to keep it afloat, a political source told Reuters.

After a group of potential rescuers backtracked in November, Alitalia is expected to run out of money by the end of the year, putting at risk 11,600 jobs and creating a major headache for the government.

The ruling coalition of the anti-establishment 5-Star Movement and center-left Democratic Party (PD) will approve later on Monday an emergency decree to ensure services provided by Alitalia continue regularly, the prime minister’s office said in a statement.

The decree is intended to unblock an already planned 400 million euro ($441 million) loan, the source said, speaking on condition of anonymity. The funds had previously been linked to the success of November’s rescue talks.

Alitalia has already received 900 million euros from the government since May 2017, when it was put into special administration following a failed restructuring attempt.

It has not repaid that loan or the 150 million euros in interest due on it. Rome and Brussels are in close contract over the provision of further funds, given the EU’s rules on limiting state aid to companies.

Italian railway group Ferrovie dello Stato, which was in talks with infrastructure group Atlantia and U.S. carrier Delta Air Lines, said in November it was not yet able to form a consortium of rescuers for Alitalia.

German airline Lufthansa (LHAG.DE), which offered a commercial partnership with Alitalia, said it was not prepared to invest in the Italian company.

The government plans to launch a new process for the sale of Alitalia to be completed by May 31, 2020, according to a draft decree seen by the source.

The new scheme will give to the three state-appointed administrators the power to reduce the carrier’s workforce and fleet of airplanes, the source added.

Industry analysts calculate Alitalia has already burned through roughly 9 billion euros in taxpayers’ money.

Reporting by Giuseppe Fonte; Editing by Giselda Vagnoni and Mark Potter

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