With a 3 plane scramble on Southern Italy (Germany flies one down), attacking Italy’s navy becomes somewhat trickier. If you send the house, which would include the fighters from Gibraltar and Malta and the bomber from London, you can still get upwards of 80% odds and you may have 2-3 units remaining on average, which means your planes usually which are going to get amphibious assaulted right after they land on Malta.
If you pull back just one plane to send one plane after the destroyer/transport outside of Malta, your odds quickly drop to what amount to a 50/50 against Italy on who has the last unit left. This still leaves Italy with probably no planes and just the Cruiser/Destroyer/Transport.
Other options: send the Gibraltar fighter to London for scramble defense against Germany or just basic offense and use the bomber alone to go for the destroyer outside Malta. Risky but good payoff. The problem with only sending two planes to SZ97 is that with a 3-plane scramble your odds plummet to around 14-15% and even if you win the boatsmash it is very likely Italy will have all of their planes still.
At the start of the game you make 3x the money that Italy makes. If your London navy survives you can send some or all of it to clean up what it left of the Italian navy, along with any navy you build out of South Africa, which is only one turn from being within striking distance.
If Germany doesn’t land that plane in Southern Italy you almost have to take that boatsmash. With just a 2-plane scramble you can send just 2 planes for the 50/50 shot, which means leaving Italy with only 1 transport. Italy with only 1 transport is a tough climb back. If you sent “everything” to SZ97 with a two-plane scramble you would have about 95-97% odds but out of your 3 boats and 4 planes you would still likely lose 3 units.
So the key isn’t saving your UK boats, it’s killing Italian transports and just trusting in the fact that you make so much more money than Italy that they’ll never be able to get off the ground. That means less forces in Africa and almost no chance of Italy taking Egypt.
Sometimes it’s simply safer to just pull back your Navy through through Egypt where Italy can’t get it and simply outbuild their navy while protecting Egypt. Come back with a bigger navy before Italy can start making 20-25 IPC a turn.