Alitalia has taken initial soundings from the European Commission (EC) over the prospect of releasing its state-aid restrictions if the Italian carrier moves towards privatisation, possibly within the next year.

Chairman Fausto Cereti is understood to have raised the issue in Brussels during talks over the airline's compliance with the EC restrictions, imposed as the price for the L2,750 billion ($1.5 billion) state aid approval in July 1997.

Among the key conditions is a limit of 2.7%, put on the growth in annual seat capacity through to the end of 2000. There is some room for growing faster if the overall European market goes above 5%, but Alitalia is keen that the limit does not handicap its ability to exploit the new Malpensa hub in Milan, which is due to take over from Linate in October.

Alitalia hopes that an accelerated privatisation programme will give it grounds to renegotiate at least some of the terms. The airline's parent, the state holding company IRI, has already agreed to cut its stake to 60% by the end of this month. That could diminish further if the final L750 billion tranche were now to come from private investors. Italian sources suggest that another 10-15% could go.

IRI, which is under Italian Government pressure to accelerate the sale of its holdings, has indicated that its stake in Altialia is due to fall below 60% this year.

Transport Commissioner Neil Kinnock has so far offered no hope of relaxing the limits, but sources within Alitalia believe that the situation could change if the privatisation actually materialises, especially given heavyweight backing by Italian politicians in Brussels.

Source: Flight International