EasyJet Plc formally dropped out of the bidding for bankrupt Alitalia SpA, dealing a setback to the latest effort by Italy’s government to rescue the money-losing flag carrier.

EasyJet was in talks with Ferrovie dello Stato Italiane SpA and Delta Air Lines Inc. to form a group to take over Alitalia’s operations, according to a statement Monday. The two carriers would invest as much as 400 million euros ($450 million) in a “new Alitalia” after the Italian airline’s second bankruptcy process in a decade.

Delta said Monday that it’s still interested and discussions are ongoing. The only other alternative to liquidating Alitalia may be giving a rescue role to Deutsche Lufthansa AG, people familiar with the matter said last week. EasyJet was close to withdrawing from the process, Bloomberg News reported then.

A liquidation of Alitalia would be damaging for Italy’s ruling coalition partners, ahead of an intensifying European Parliamentary election campaign. EasyJet wanted Alitalia’s short-haul flights and preferred to break it up.

Lufthansa has signaled it’s interested, but only if the government first cuts back on headcount. The German carrier wants to keep no more than 60 percent of Alitalia’s workforce, the people said last week.

©2019 Bloomberg L.P.

This article was written by Anthony Palazzo from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Photo Credit: An Alitalia aircraft. EasyJet has pulled out of the bidding process. Bloomberg