Cabinet ministers were presented with “a decree… to start the process of looking for a partner for ITA”, Finance Minister Daniele Franco told a news conference.
He said there was no timing yet, and it could be through “public offer or direct sale”, but “the government will maintain a minority share, not a controlling share of ITA, that could be sold at a later stage”.
German carrier Lufthansa and MSC, the world’s biggest container shipping company, expressed an interest last month in acquiring a majority stake.
The government has decided to open up the sale to all potential bidders, despite a request by MSC and Lufthansa for a 90-day period of exclusivity in the negotiations.
ITA, which began operating in October out of the ashes of loss-making Alitalia, is valued at between 1.2 billion and 1.4 billion euros, a financial source told AFP.
Italy had tried for years without success to offload the loss-making carrier Alitalia, which was placed under state administration in 2017. It accumulated losses of 11.4 billion euros between 2000 and 2020 before being closed down last year.
Its situation was made worse by the coronavirus pandemic, which grounded airlines worldwide.
“A sale to MSC and Lufthansa could be the last chapter in a history that has already cost the taxpayer too much money,” said Andrea Giuricin, a transport economist at Milan’s Bicocca university.
He told AFP: “ITA Airways will not be able to survive on its own, without the support of a major European airline. In the first two and a half months of its existence, it lost 135 euros per passenger carried.”
Italy pumped 700 million euros ($800 million) into ITA in 2021, with two further injections of funds expected this year and next, totalling 1.35 billion euros.
The next tranche of 400 million euros is due by the end of March.