Italy's revamped airline readies July take-off as EU talks drag

MILAN, April 27 (Reuters) - A new Italian airline hopes to replace Alitalia from July 1, the state-owned carrier’s chief executive said on Tuesday, although several European Commission hurdles still need to be overcome.

Rome last year began a plan to restructure Alitalia and launch ITA, which was supposed to replace the cash-strapped airline, which was beset by years of losses, in early April.

This was delayed by lengthy negotiations with Brussels which risk scuppering the project unless ITA grabs the last window of opportunity in the summer season, CEO Fabio Lazzerini said.

“We need to start quickly because the (air traffic) market is picking up and ... Alitalia rivals are acting aggressively, especially low-cost carriers,” Lazzerini said, citing Ryanair’s plan to offer 100 routes in Italy during the summer.

“We aim to start flying on July 1 with a small number of aircraft that will gradually grow over time,” he told a hearing with four Italian parliamentary committees.

While ITA was in talks with the EU Competition watchdog about its plan, it was also in talks with Air France-KLM , Delta and Virgin on one side and Lufthansa on the other over a possible partnership, he added.

A decision on a partner is expected by end-June, Lazzerini said, adding that discussions with the Commission were ongoing and the main concerns were whether the new carrier could buy Alitalia’s brand, its loyalty programme and the majority of Milan’s Linate airport slots.

ITA was also trying to convince Brussels it needed the former airline’s handling and maintenance businesses.

Under EU state aid rules, there needs to be economic discontinuity between ITA and Alitalia for Brussels to allow Rome to inject 3 billion euros ($3.6 billion) into the new carrier.

Before the coronavirus pandemic, Alitalia had nearly 70% of Linate’s slots and ITA is resisting EU requests to give up half.

This position is driven by a desire to keep them out of the hands of competitors and also to use them to encourage rival airlines into an industrial partnership. ($1 = 0.8280 euros) (Reporting by Francesca Landini; Editing by Alexander Smith)