Ryanair hikes Italy investment after government does tax U-turn

ROME (Reuters) - Low-cost airline Ryanair said on Wednesday it had reversed a decision to cut back operations in Italy and would instead invest a billion dollars in the country in 2017 after the government froze plans to hike passenger departure taxes.

Ryanair will add 10 new aircraft to its Italian network and open 44 new routes in a move it said would lift its passenger traffic by 10 percent to 35 million next year.

"We are talking about new investments in Italy that we are making by revisiting our programmes in Greece, Poland and Spain," Ryanair CEO Michael O'Leary told reporters, suggesting his firm would cut back on operations in those three countries.

Ryanair said the plan envisaged creating 2,250 jobs at various Italian airports.

The low-cost airline said earlier this year that it planned to shed 600 jobs in Italy after the government announced it would raise departure taxes to 9 euros (£7.80) from 6.50 euros to help subsidize layoffs at former flagship carrier Alitalia.

However, the government put the planned hike on hold last month, encouraging Ryanair to boost its Italian network.

(Reporting by Alberto Sisto, Writing by Crispian Balmer; Editing by Alexandra Hudson)