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Last Updated: Friday, 28 December 2007, 16:23 GMT
Air France Alitalia bid approved
Alitalia plane
Alitalia has been losing money for years
The Italian government has given its backing to Air France-KLM's proposal to buy Alitalia.

The loss-making airline will now enter eight weeks of exclusive talks with its preferred bidder, Italy's Economy Minister Tommaso Padoa-Schioppa said.

The contest to buy the government's stake in Alitalia had been closely fought, with the firm choosing Air France-KLM last week.

Alitalia is hoping the tie-up will generate significant savings.

'Favourable opinion'

We are convinced that the indication given by Alitalia's board is the right one
Tommaso Padoa-Schioppa, Italy's finance minister

"I expressed a favourable opinion on the launching of exclusive negotiations between Alitalia and Air France-KLM," said Tommaso Padoa-Schioppa, Italy's finance minister, after a government meeting.

"We are convinced that the indication given by Alitalia's board is the right one," he added.

The government, which holds 49.9% of Alitalia, failed to sell the company by auction earlier this year.

Alitalia is struggling under 1.2bn euros ($1.7bn; 869m) of debt and is losing more than 1m euros a day.

SEE ALSO
Alitalia prefers Air France bid
21 Dec 07 |  Business
Alitalia rivals outline bid plans
17 Dec 07 |  Business
Decision on Alitalia sale delayed
13 Dec 07 |  Business
Alitalia sale attracts three bids
06 Dec 07 |  Business
Alitalia is 'comatose' says boss
26 Sep 07 |  Business
Alitalia auction ends in collapse
18 Jul 07 |  Business

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