The passenger ship Monterey, subject of a recent congressional debate over whether it should be allowed to leave the U.S.-flag fleet, departed Honolulu earlier this week to begin a new life cruising the Mediterranean under the Panamanian flag.

It will be added to the fleet of Lauro Lines, a cargo and passenger ship operation based in the Italian city of Naples. Lauro, a subsidiary of Mediterranean Shipping Co. SA, Geneva, Switzerland, is most famous as the owner of the Achille Lauro, the passenger ship aboard which one of the most notorious terrorist incidents of the mid-1980s took place.Gianluigi Aponte, the president of Mediterranean Shipping, said the Monterey should begin cruising the west Mediterranean about May 19. It will carry an Italian crew and retain the Monterey name, he said.

The acquisition is part of a broader expansion plan for Lauro, Mr. Aponte said, although no specific further purchases are planned right now. "Lauro has a very strong commercial organization we intend to exploit. We'll buy further passenger vessels," he said.

The Lauro passenger fleet now includes three vessels: the Monterey, the Achille Lauro and the Angelina Lauro, a vessel that is chartered in from other owners. In addition, the company runs cargo vessels between southern Europe and Central America.

At a $14 million purchase price, the 1952-built Monterey ought to be a profitable investment, Mr. Aponte said. "They spent $40 million on renovations for her last year, so for us it's been a real bargain. It's worth that kind of money - $14 million at the very least," he said.

That price was bid at auction in Honolulu on March 15 by Connecticut Bank & Trust Co., acting as trustee for Wartsila Marine Industries Inc., Helsinki, Finland, holder of a $35 million mortgage on the vessel. Wartsila was the shipyard that had done much of the renovation work on the Monterey.

It was the second auction of the ship, but the first in which buyers knew that the U.S. Maritime Administration would permit the Monterey to be transferred to the Panamanian flag. An earlier auction had attracted no bidders.

Maritime Administrator Warren Leback came under attack March 14 by Rep. Helen Delich Bentley, R-Md., and Rep. Jack Fields, R-Texas, for permitting the reflagging of the ship. They said the vessel was a vital national security asset that should have been retained under the U.S. flag.