(Bloomberg) -- Italy’s new government is reviewing options for retaining oversight of ITA Airways, in a strategic volte-face that risks becoming a major stumbling block for potential suitors like Deutsche Lufthansa AG. 

Options under review by Prime Minister Giorgia Meloni’s government include seeking special powers to influence or veto governance or strategy of ITA following the sale of a stake to Lufthansa, or partnering with state-railway company Ferrovie dello Stato Italiane SpA, or FS, according to people familiar with the talks, asking not to be identified discussing confidential deliberations. The option of bringing the state-owned railway on board could let Italy keep a majority in the airline, the people said.

While a partnership with FS would allow Italy to bolster its oversight of the company after a sale, the move might deter Lufthansa, which has signaled it would be willing to explore a deal only if the German airline gains control of its Italian rival, the people added. Meloni’s latest move backs away from the previous administration’s willingness to give up most of the asset to ensure ITA can survive with new commercial partners.

Lufthansa wants control of the asset rather than being just a shareholder, and an arrangement whereby the airline becomes a junior partner isn’t attractive to the carrier, according to two other people with direct knowledge of the airline’s thinking. 

Representatives for the Italian government, ITA and Lufthansa declined to comment.

ITA and its predecessor company, Alitalia, have been losing money for years, and the new carrier formed after Alitalia was dissolved in 2021 has only been able to continue flying thanks to state aid. The government spent at least €5.4 billion ($5.4 billion) since 2008 keeping Alitalia aloft and providing capital for its successor.

A deal with Lufthansa remains one of the few options left for Italy to keep the company going, after interest from the world’s biggest container line, MSC Mediterranean Shipping Company SA, faded. Keeping the asset under state control would mark something of a U-turn for the government, after Meloni’s predecessor, Mario Draghi, signaled his willingness to sell to private investors.

--With assistance from William Wilkes, Andrea Brambilla and Daniele Lepido.

(Updates with Lufthansa viewpoint in fourth paragraph.)

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