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Last Updated: Friday, 21 December 2007, 22:53 GMT
Alitalia prefers Air France bid
Alitalia plane
Alitalia has a number of prime routes that other firms want to run
Alitalia has chosen Air France-KLM as its preferred bidder, clearing the way for takeover talks to pick up pace.

Italy's national carrier said that a tie-up with Europe's biggest airline would generate significant savings.

A number of groups have been linked to a takeover of Alitalia, including Air France-KLM's main rival Air One.

The government is looking to bring in outside help as Alitalia struggles with 1.2bn euros ($1.7bn; 869m) of debt and is losing more than 1m euros a day.

The state still owns a 49.9% stake in Alitalia.

Nationalist sentiment

Some analysts were tipping Air One to become preferred the bidder because it was an Italian company.

With nationalist sentiments running high in Italy over the prospect of a takeover, Air France-KLM gave assurance it would not downgrade the country's largest airline into a regional carrier.

"The reputation of the Alitalia brand, a key asset for the whole group, will be developed in Italy and abroad," said Air France-KLM Chairman and Chief Executive Jean-Cyril Spinetta.

Mr Spinetta said the Air France-KLM was "delighted to have had our plan accepted as the best for the future of Alitalia".

Alitalia is losing money at a rate of 1m euros a day and is weighed down by 1.2bn euros of debt.

A decision on the takeover is expected by the end of January.

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