October 16, 2013 / 5:48 PM / 5 years ago

Italian minister confident EU will allow Alitalia rescue plan

BOLOGNA, Italy (Reuters) - Italy’s transport minister Maurizio Lupi does not believe a government-sponsored rescue plan for loss-making airline Alitalia CAITLA.UL will fall foul of European state aid rules, he said on Wednesday.

An Alitalia plane approaches to land at Fiumicino international airport in Rome October 14, 2013. REUTERS/Max Rossi

Earlier this week International Airlines Group (ICAG.L), which owns British Airways and Spain’s Iberia, attacked the 500 million-euro ($675 million) plan to help Alitalia and urged the European Commission to intervene.

The plan, unveiled last week, envisages a cash injection by state-owned postal services group Poste Italiane via a share issue.

“We are absolutely certain of our reasons. We do not have to justify our actions but rather explain them. I believe the European Union will share our view,” Lupi told reporters on the sideline of an event in Bologna.

Lupi said the Italian government had identified air transport as a strategic sector and asked private investors to share the burden in the re-launch of Alitalia, which has been unable to turn a profit for more than a decade and was only rescued from imminent bankruptcy in 2008.

The European Commission, which has the final say in the EU over what constitutes state aid or not, said on Tuesday it expected the Italian government to inform it of its plans.

Without a lifeline, Alitalia risks running out of cash and with it fuel supplies.

A planned 300 million-euro capital hike and credit lines worth 200 million euros would help keep Alitalia flying while it tries to work out a strategy that can make it profitable.

Yet doubts remain over whether Air France-KLM (AIRF.PA) will elect to take part in the rescue plan as Alitalia’s single biggest shareholder, with a 25 percent stake.

($1=0.7412 euros)

Reporting by Valentina Accardo; Writing by Lisa Jucca; Editing by Greg Mahlich

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