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Lufthansa sweetens long-haul concessions to gain EU okay for ITA deal, sources say

FILE PHOTO: ITA Airways presents its new fleet of aircraft at Fiumicino airport

By Foo Yun Chee and Ilona Wissenbach

BRUSSELS/FRANKFURT (Reuters) - Lufthansa boosted concessions to soothe competition concerns over long-haul flights to help it win over EU regulators in its bid for a stake in Italy's ITA Airways, three people with direct knowledge of the matter said on Monday.

The European Commission, which acts as the EU competition enforcer, has warned that the deal may reduce competition in Italian short-haul and long-haul flights, with the latter seen as the most difficult to resolve.

Under Lufthansa's latest concessions, two rivals can take some of ITA's flights and turn them into indirect flights with a stopover in another EU city, and onwards to U.S. destinations including San Francisco and Washington, the people said.

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This would for example help rivals such as KLM get feeder traffic for its U.S. flights at its Amsterdam hub.

State-owned ITA, the successor to Alitalia, will also hand over direct flights from Rome to North America to another airline, they said. The aim is to give passengers an additional choice of two indirect flights and one direct flight to some U.S. cities.

"We are in good and constructive dialogue with the Commission," a Lufthansa spokesperson said, declining further comment.

Lufthansa will likely secure the EU green light for the deal, sources told Reuters last week. The Commission is expected to decide on the deal by the end of the month, ahead of its July 4 deadline.

(Reporting by Foo Yun Chee; Additional reporting by Giuseppi Fonte and Alvise Armellini in Rome; Editing by Alison Williams)