By Giuseppe Fonte and Angelo Amante
ROME (Reuters) -Italy's Prime Minister Giorgia Meloni on Wednesday approved a decree to sell an initial minority stake in ITA Airways with the aim of facilitating the full privatisation of the state-owned carrier, a government statement said on Wednesday.
A draft of the decree seen by Reuters stipulated that another airline must end up with a majority stake in ITA after the privatisation process is concluded, making clear the government did not want a fund to purchase the carrier.
It also allows bidders to buy stakes in ITA through one or more capital increases.
Germany's Lufthansa is the frontrunner to enter ITA's capital, sources have said. They added that the company has said it wants a minority stake in the immediate term.
Lufthansa and ITA declined to comment on the government's move, but ITA Chief Executive Fabio Lazzerini said earlier on Wednesday that talks with the German company were ongoing "in a very collaborative way".
In an effort to speed up the sale process, the decree removed an obligation for the Treasury to immediately sell a majority stake in the carrier, as laid out by the previous government of Mario Draghi earlier this year.
However, it said the Treasury must have a say on any new shareholders during the sell-off process.
The privatisation of the carrier, which officially replaced loss-making Alitalia in 2021, has proved a headache for the Treasury.
Under a deal with the European Union, Italy could still inject some 250 million euros ($265.4 million) into ITA before the end of 2023.
Industry sources estimate ITA, which last year posted an operating loss of 170 million euros, to be worth around 500 million euros.
An exclusivity period of talks with U.S. private equity fund Certares, Air France KLM and Delta ended in October without producing any deal, leading to the reopening of the process.
Lufthansa had initially partnered with shipping group MSC to bid for ITA, but MSC said last month it was no longer interested in the transaction.
($1 = 0.9419 euros)