The Italian government has given its backing to Air France-KLM's proposal to buy Alitalia.
Alitalia has been losing money for years
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.
"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.