Lufthansa, Consortium In Talks On Alitalia

October 18, 2007

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A consortium led by Italian lawyer Antonio Baldassarre is in early stage talks with Lufthansa for a possible bid for Alitalia, an Italian source close to the consortium said on Thursday.

Baldassarre's group and Lufthansa were both listed separately as part of an Alitalia shortlist of six potential buyers for the loss-making airline.

But Alitalia has said it would start talks with the consortium, which says it has set aside an initial EUR1.5 billion euros to buy the airline, only after it proves it has sufficient financial muscle to pull off a deal.

Lufthansa did not participate in an auction for Alitalia that collapsed earlier this year when all the bidders pulled out, saying it was not interested under prevailing conditions.

The German airline has since said it is open for potential talks, but that any partnership with the Italian airline must make sense for both sides.

Alitalia's Chairman Maurizio Prato told members of parliament on Thursday that the airline plans to identify its preferred partner within the first 10 days of November, an Italian lawmaker present at the hearing said.

Prato has said he prefers an industrial group that can reorganize the airline rather than an investment fund that may want to cash in its stake after a few years, a union source said after a meeting with him.

(Reuters)