January deadline for Alitalia bid

The government is seeking to dilute its existing stake in the struggling carrier from 49% to 19%, and has not ruled out selling all of its shares. Air France-KLM has been linked with a possible deal although the airline remains cautious about any involvement. Officials said bidders must safeguard Alitalia's "national identity". This effectively rules out any job cuts among the firm's 18,000 staff or radical changes to its existing flight schedules. The airline has struggled in the face of tough competition and rising costs, failing to make an operating profit in each of the past five years. In a statement, Italy's Finance Ministry said those wanting to invest in Alitalia would have to demonstrate their financial resources as well as their ability to develop the airline in line with the government's recovery strategy. If the government sells 30% or more of its shares to a single bidder, the purchaser would be obliged to make a full bid for the company. Analysts have suggested that Air France-KLM, which already holds a 2% stake in Alitalia, may be its most natural partner. The airline has said such a deal may be beneficial for both parties but Italian Prime Minister Romano Prodi has expressed concerns that Alitalia may find itself the lesser partner in any such arrangement. (BBC NEWS)