Alitalia rescue plan could see Delta boost its minority stake

Rome

ITALY'S government is working on a rescue package for bankrupt Alitalia that could see US carrier Delta Air Lines Inc boost its stake in a new company from an initial minority holding, according to people familiar with the talks.

With a deadline for bids set for Monday, Delta could step in and later acquire more shares from two state bodies - railway operator Ferrovie dello Stato Italiane SpA and the Treasury - or through a capital injection, the people said, asking not to be named discussing confidential negotiations.

Ferrovie and the Treasury are expected to have a combined stake of about 50 per cent initially with Delta getting around 10 per cent to 15 per cent.

The airline has been under special administration for more than two years and now faces either liquidation or de facto nationalisation.

A group of public and private investors must submit a binding offer by Monday but most details, including who will join the bid, remain murky and one of the state companies involved is said to be seeking more time.

Deputy Prime Minister Luigi Di Maio, who's leading rescue attempts as economic development minister, is seeking agreement on a package which could include the option of a stake increase for Delta and the involvement of Atlantia SpA, the Benetton family industrial arm which operates some of the country's biggest airports.

Ferrovie is set to hold a board meeting on Monday to weigh an offer, the people said. But the company may not come up with a definitive bid that day as Atlantia only made an initial manifestation of interest to Ferrovie's adviser on Thursday. Instead, the state rail operator is set to ask for a few more weeks to come up with a final, binding offer, the people said.

That strategy was discussed on Friday morning in Rome by Mr Di Maio and Ferrovie management, the people said. Mr Di Maio is under pressure to show results and has said he will not postpone Monday's deadline. Ferrovie didn't immediately respond to requests for comment.

"Delta continues to work with Ferrovie and confirms it is interested in becoming a minority shareholder in a reorganised Alitalia," the US company said in response to a request for comment. "Discussions remain ongoing and any investment remains subject to Delta board approval." BLOOMBERG