Italy will begin exclusive negotiations for the privatisation of ITA Airways (AZ, Rome Fiumicino) with a consortium consisting of the New York private equity fund Certares, Delta Air Lines (DL, Atlanta Hartsfield Jackson), and Air France-KLM, the Ministry of Economy and Finance announced in a statement on August 31.

The group’s offer, details of which - including the precise roles of the US, French, and Dutch carriers - have not been released, was considered superior to that presented by Lufthansa (LH, Frankfurt International) and shipping giant MSC.

The ministry said in its brief statement that “following a procedure governed by the Prime Minister’s Decree of 11 February 2022 and aimed at the sale of control of ITA SpA, an exclusive negotiation will be started today with the consortium formed by Certares Management LLC, Delta Airlines Inc. and Air France-KLM SA, whose offer was deemed more in line with the objectives” set by the decree.

It added: “At the conclusion of the exclusive negotiation, binding agreements will be signed only if the contents are fully satisfactory for the public shareholder.”

The decision comes after a protracted process of several months in which the two bidders were twice told to tweak their earlier proposals. The most recent offers were opened for study on August 23. With elections looming in less than a month, the future of the successor to bankrupt flag carrier Alitalia remains dubious. A new, likely more nationalist, coalition may try to block the sale, but according to reports the right wing in Italy sees the Certares-led bid as the more favourable option. Prime Minister Mario Draghi’s government has said it wants to sign a preliminary deal with the preferred bidder by September 10.

Sources had told local media that Certares - which has its European headquarters in Milan - said in its most recent bid that it was willing to reduce its stake in ITA Airways to 55-57%, leaving the rest to the Italian state, while MSC and Lufthansa were looking for 80%. A source confirmed to the Reuters news agency on August 31 that with Certares as a partner the ministry would have at least a 40% stake and the right to appoint the airline’s chairman and enjoy a veto on “strategic choices.”

Certares is reportedly offering around EUR600 million euros (USD600 million) for the 60% stake, while MSC-Lufthansa was offering EUR850-900 million (USD850-900 million) for the 80% shareholding. In response to the ministry’s announcement, a Lufthansa spokesperson has said simply: “We take note of the decision. We are still convinced our offer with MSC is the better solution.”