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Exclusive: Lufthansa CEO calls for significant Alitalia cuts - letter

Reuters  |  FRANKFURT 

By Wissenbach

(Reuters) - sees need for significant restructuring at Italy's before the German group would be prepared to buy the airline, Lufthansa's said in letter seen by Reuters, tempering expectations for quick deal.

"While recognising the valuable measures that have been undertaken to date... we strongly believe that there remains considerable amount of work to be achieved before would be in the position to enter comprehensively into the next phase of the process," said in the letter to Italian on Thursday.

He said restructured "NewAlitalia" would be smaller in terms of both staff and its fleet.

Alitalia, which has made profit only few times in its 70-year history, was put under special administration last year after staff rejected plan to cut jobs and salaries.

There was no immediate response from the Italian ministry or the itself.

has around 9,200 full-time staff, plus further 1,600 in state-backed temporary layoff scheme. Any permanent job cuts would be particularly sensitive ahead of national election in March.

has said it aims to strike deal before the election, and person familiar with the matter has said the commissioners managing were hoping to agree exclusive talks within the coming days.

Lufthansa, British low-cost carrier and U.S. private equity fund are among companies that have expressed an interest in

source close to the matter had told in November that had offered 250 million euros ($300 million) to take on most of Alitalia's fleet of aircraft and half of its staff.

had offered to keep around 90 to 100 planes, down from fleet of 123. It is not interested in Alitalia's

was once symbol of Italy's post-war economic boom but is now struggling to compete against low-cost carriers and high speed trains at home. It has not invested sufficiently in higher-margin long-haul routes to get back to profit.

has ruled out renationalising Alitalia, but the fate of the remains politically sensitive and any tough restructuring to suit foreign investor would rankle - especially if it involved thousands of job cuts.

Spohr said in the letter to Calenda that he saw "considerable merit" in developing the opportunity to add to of airlines but that the German group was not in position to play leading role in the Italian company's restructuring.

"We therefore strongly recommend and indeed encourage the commissioners to start implementing key restructuring measures which would be common and beneficial to all prospective bidders," he said.

surpassed last year to retake the crown as Europe's largest by passenger numbers.

($1 = 0.8321 euros)

(Reporting by Wissenbach; Additional reporting by Agnieszka Flak; Writing by Maria Sheahan; Editing by and Keith Weir)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, January 12 2018. 00:30 IST