Rome. Air France-KLM said Thursday it would join the Italian consortium set to revive Alitalia if it sees a realistic prospect of a return to profit.
''Air France believes in the Italian government,'' said Transport Minister Altero Matteoli, adding that German airline Lufthansa was also interested.
''It will be up to Alitalia to choose Air France or (Lufthansa),'' he said.
Air France made its announcement shortly after tailor-made changes to Italy's bankruptcy laws paved the way for the rescue operation to be launched Friday. The Franco-Dutch giant, which walked away from a contested takeover deal in April, saw its shares rise by some 3% following the announcement. Earlier on Thursday, the cabinet approved measures making it easier to liquidate Alitalia so a new company, dubbed Compagnia Aerea Italiana (AEC), could rise from its ashes.
The changes to Italy's 2004 bankruptcy law will allow Alitalia's government-appointed commissioner, former finance minister Augusto Fantozzi, to sell assets immediately.
The existing law, crafted in the wake of the Parmalat collapse, allowed the failed dairy giant to stay in business and gradually work its way back from the brink of financial ruin.
Analysts say Alitalia must be turned around more quickly.
The sale to a new consortium would take place at market prices, the government said.
Investors, who have seen their shares tumble over the last few years, would receive compensation from a special fund set up in 2006. Alitalia is set to be split Friday into a new company with viable parts and a bad company which will take on its liabilities and be put into receivership.
The new company, to be led by financier Roberto Colaninno, will see 16 investors among Italy's top industrial and financial groups putting in some one billion euros to create what has been called a national champion after a merger with Italy's top private airline Air One.
The new Alitalia, which reported operating losses of 800 million euros this year, would cut them to about 250 next year and return to profit in 2011, according to the Italian press. The company will have fewer flights and planes but may rebuild operations - focusing more on Milan's Malpensa airport than its current hub at Rome Fiumicino - in the event of the strategic alliance with Air France.
The operation will involve some 7,000 lay-offs which the government has promised to ease by giving all Alitalia workers wage-replacement subsidies for seven years.
Most of the workers will find new jobs in the private sector, the government said.