Demands BA, Lufthansa, Others Quit Undercutting Alitalia

Hoping to keep state carrier Alitalia from falling into the dark abyss of bankruptcy, Italy has ordered other airlines -- including British Airways and Lufthansa -- to knock off the fare wars and quit undercutting the home team.

The Financial Times of London reports Italy has agreed to provide Alitalia emergency loan guarantees of $493 million, hoping to keep the airline afloat.

The British government, as you might imagine, isn't so happy about the Italians telling their flag carrier how much it can charge. The UK is now protesting Italy's protectionist move to the European Commission, demanding the Italian order be rescinded until its validity can be confirmed.

Executives at Lufthansa said they were conducting talks with the Italian government on the heels of the order.

BA executives expect this is the first round in what could be an all-Europe battle over national carriers and the fares their competitors charge. The Financial Times reports BA leaders expect more protests over its fare structure in countries like Germany, Poland, Hungary and The Czech Republic.

FMI: www.british-airways.com