ITALIAN INVESTORS READY TO FINANCE ITALO-AMERICAN

UNCLAS MILAN 000329 SIPDIS SENSITIVE SIPDIS STATE FOR EUR/WE, EB/TRA/OTP, EB/TRA/AN, EB/TRA DAS BYERLY E.O. 12958: N/A TAGS: EAIR ECON ETRD IT KPRV SUBJECT: ITALIAN INVESTORS READY TO FINANCE ITALO-AMERICAN AIRLINE REF: A. 06 ROME 3330 ¶B. MILAN 0273 ¶1. (SBU) Roberto Formigoni, President of Lombardy Region, told the CG that Italian investors are on board to finance a new airline as a joint venture with an American carrier. He promised the Italians will put up the cash if the Americans put up the expertise. Formigoni is keen to replace Alitalia flights cut from Malpensa (see ref B),and hopes a fifty-one percent Italian-owned company run by a reputable American carrier is the answer. The Region intends Malpensa to remain an intercontinental hub and not a regional European airport. So far, only short-haul airlines such as RyanAir, EasyJet, and Volare have expressed interest in Alitalia's soon-to-be-vacant slots at Malpensa. The Lombardy Region is also in talks with Lufthansa to increase its intercontinental flights. (Comment: Post questions whether Lufthansa would add anything other than feeder flights at Malpensa given their massive, nearby hub in Munich. End comment.) ¶2. (SBU) Roberto Cattaneo, Lombardy Region Commissioner for Transportation called for American airlines to increase their service to and from Malpensa at a Post-hosted discussion with Continental, US Airways and American Airlines. Cattaneo quickly ran through an economic analysis of Malpensa's current and projected future traffic and explained infrastructure enhancement projects planned for the airport. The US airlines were noncommittal, noting it will be hard to convince their headquarters to expand service at Malpensa. ¶3. (SBU) Comment: Formigoni is seriously worried about the future of a post-Alitalia Malpensa. Post believes the Region is still working hard behind the scenes to get Alitalia to reconsider their flight cuts, but they are actively looking for other solutions. Formigoni's offer to connect an American airline with Italian financiers for a joint venuture is a serious one, and Formigoni would put his considerable political clout behind such a venture if an American carrier were interested. End comment. WEYGANDT