Italian government approves Air France's Alitalia bid

The Italian government has approved the Air France-KLM proposal to acquire cash strapped Alitalia, which has been losing around €1 million every day and has accumulated debts of €1.2 billion. (See: Air France KLM offers to acquire Alitalia)

On Friday the board of Alitalia had opted for the Franco-Dutch airline as its preferred buyer, saying that it was a better fit as compared to a small Italian airline, Air One, favoured by some politicians and labour unions.

The board's decision, however, had to pass muster with the Italian government, which holds a 49.9 per cent stake in the badly haemorrhaging Italian flagship airline.

Alitalia will now enter eight weeks of exclusive talks with Air France-KLM, and expects the tie-up to generate significant savings.
The Italian government had earlier this year been forced to call-off an auction as most bidders had dropped out from the sale. In October, Alitalia had identified six possible bidders as it tried to resuscitate efforts to sell the state's 49-per cent stake to a private investor, after three potential bidders that included Aeroflot and Lufthansa withdrew in succession from an auction in July for the Italian carrier over conditions attached to the sale, lack of clarity about the airlines' finances and obligations regarding future services. (See: Alitalia auction closes without a serious bidder)