ROME: Italy has struck a deal with the European Commission over the creation of a new airline to replace its beleaguered national airline Alitalia, the economy ministry said yesterday. Italia Trasporto Aereo (ITA), the new Italian flag carrier, "will be fully operational from October 15", after Rome reached a "constructive and balanced solution" with Brussels, a ministry statement said.

The new airline had initially been expected to launch in August to benefit from the peak tourism season, but months of talks with the Commission dragged on even after a preliminary deal in May. The Commission, charged with policing state aid in the EU, needs to give the go-ahead to Italy's 3.0 billion euro ($3.6 billion) bailout of Alitalia, its former flag carrier. The Commission has insisted that the new airline mark a rupture with Alitalia, and not only by changing the name.

The new airline will have a fleet half the size of its predecessor, ground operations will be spun off and airport slots ceded. The accord will "guarantee the discontinuity necessary to comply with European regulations," and open the way for a planned capital hike for ITA, the ministry said Thursday, without giving any figures. The deal is expected to result in job losses.

As things stand, over 11,000 people work for Alitalia, from pilots to maintenance and ground staff.

Economic Development Minister Giancarlo Giorgetti said ITA would hire around 2,800 people in 2021 and another 5,750 people in 2022. Loss-making Alitalia, whose financial condition worsened under the coronavirus pandemic, had already been placed under state administration in 2017. Italy struggled in vain to find an outside investor to take it over, before eventually deciding to seek approval for a new bailout. - AFP