Italy’s Ministry of Economic Development has extended the deadline to present binding bids for troubled Alitalia (AZA, Rome Fiumicino) to November 21, it revealed on October 21.

The previous deadline of October 15 passed without agreement between the potential rescuers - the state-owned railway group Ferrovie dello Stato, the infrastructure group Atlantia, and Delta Air Lines (DL, Atlanta Hartsfield Jackson). The ministry has asked Alitalia's administrators, who have run the carrier since May 2017, to be directly involved in the ongoing negotiations between the parties, Reuters news agency reported.

On October 16, Ferrovie dello Stato asked for an extension of at least eight weeks to come up with a binding offer. The following day, Rome agreed to a EUR350 million euro (USD390 million) bridging loan to Alitalia to ease immediate cash worries, adding to EUR900 million (USD1 billion) already disbursed in two tranches in 2017 and 2018.

Also on October 17, two people close to the matter said Lufthansa (LH, Frankfurt International) was open to a commercial partnership and could take a stake in its Italian rival, according to both Reuters and Italy's Il Messaggero newspaper. However, the German carrier would only be open to making an investment if deep restructuring is implemented. Alitalia was reportedly down to just EUR310 million (USD345 million) in cash reserves by the end of September.

Lufthansa has said on numerous occasions that the Italian market is of interest, but it has also demanded downsizing Alitalia in terms of staff and fleet. The Italian airline has a workforce of 11,600 people and currently operates 116 aircraft (twenty-two A319-100s, thirty-eight A320-200s, ten A321-100s, fourteen A330-200s, eleven B777-200(ER)s, and one B777-300(ER), and it also wet-leases in fifteen E170s and five E190s from its Alitalia CityLiner (CYL, Rome Fiumicino) subsidiary), according to ch-aviation fleets.

However, it may now be more flexible with its demands, one of the sources told Reuters. Rome would welcome a Lufthansa stake, a government spokesman said.

Any involvement from Lufthansa may shut out Delta, which has angered the Italian government by insisting on a contribution of just EUR100 million (USD111 million). This was revised to EUR120 million (USD134 million) in early October. Like Delta, Alitalia is part of Skyteam, while Lufthansa is part of Star Alliance. A source told Reuters that Alitalia switching from Skyteam to Star would cost around EUR80 million (USD89 million).