Italy's Treasury on Friday 27 January said it had signed a letter of intent with Lufthansa over the sale of a minority stake in state-owned airline ITA Airways, paving the way for negotiations with German carrier.
Earlier this month, Lufthansa offered to buy a minority stake in the loss-making successor of Italy's Alitalia, saying Italy was a prominent market both for business travellers and tourists.
Details on the offer were not disclosed, but sources close to the matter said Lufthansa was aiming for a 40% stake of ITA, valued at between 200-300 million euros.
Lufthansa said on Friday 27 January it had signed the letter of intent with the Italian Ministry of Economy and Finance and ITA Airways.
"The parties will now start negotiations on the structure of a possible participation," Lufthansa's statement said.
The Italian Treasury and the German airline said no further information would be shared about the talks.
The new right-wing administration in Rome passed a decree in December to initially sell a minority stake through capital increases, to speed up a full divestment in ITA.
In a statement last week, the German company - which already operates the brands Swiss, Austrian Airlines and Brussels Airlines - said it was planning to agree options to purchase the remaining ITA shares at a later date.
Terms Of The Bidding Process
Under the terms of the bidding process, Lufthansa has to ensure it will develop Italy's main hubs and guarantee ITA has access to strategic markets as well as increases its long-haul routes.