Italy works on extending Alitalia loan deadline: source

ROME (Reuters) – Italy is working on an extension of as much as six months to a Dec. 15 deadline for Alitalia to repay a 900 million euro ($1 billion) loan meant to keep the airline afloat while it searches for a buyer, a government source said on Saturday.

Once a symbol of Italy’s post-war economic boom, but recently in trouble due to competition from low-cost carriers and high speed trains, Alitalia was put under special administration last year after workers rejected a rescue plan.

As part of the process, Rome has been looking for a buyer, but it has been delayed because of a change of government.

Any extension to the bridge loan deadline may irk the European Commission, which has already been looking into whether it constituted state aid. It may also violate EU guidelines, which allow rescue loans only as a short-term emergency measure.

Alitalia declined to comment.

Officials within the populist government that came into power in June have said that Rome would like to put 51 percent of Alitalia in public hands, possibly via a tie-up with one of Italy’s state-owned giants, flanked by a strong industrial player.

Gianfranco Battisti, the head of Italy’s Ferrovie dello Stato (FS), said last month that Alitalia could be an opportunity for the state-owned railways group, adding he saw synergies in ticketing and routes.

However, Battisti said on Friday that FS was not focused on “financial participations in other companies” at the moment, in comments attributed to him by Italian newspapers on Saturday.

Earlier this year, EasyJet (EZJ.L), Lufthansa (LHAG.DE), and budget carrier Wizz Air (WIZZ.L) submitted expressions of interest in at least parts of Alitalia.

Industry Minister Luigi Di Maio, who this week promised to conclude the Alitalia question in November, has called a meeting with the airline’s unions for Friday, Oct. 12.

The sale was supposed to be concluded by April 30, but that was moved to the end of October due to the government change.

($1 = 0.8679 euros)