Alitalia To OK Air France Deal - Source

January 8, 2009

Alitalia's board will meet on Monday to approve the sale of a minority stake to larger rival Air France-KLM after months of negotiations, a source close to the Italian airline said on Thursday.

The Franco-Dutch carrier has beaten rival Lufthansa for a stake of about 25 percent in the Italian carrier, two sources close to the matter have said previously.

Italian Prime Minister Silvio Berlusconi on Wednesday indirectly confirmed the French victory in the tussle by saying that his preferred candidate, Lufthansa, never made an offer.

The source confirmed newspaper reports that Air France-KLM would pay about EUR300 million euros for the stake, but said the figure was approximate. La Repubblica daily reported the French carrier would pay EUR310 million for a 25 percent stake.

Both Air France-KLM and Lufthansa had been eyeing Alitalia as a way to gain a foothold in Europe's fourth-largest aviation market that combines busy business routes in Italy's north with heavy tourist traffic to destinations like Rome.

Alitalia went bankrupt last year after muddling through years of losses, strikes and inefficiencies but is being revived by the CAI Italian investor group, which bought the carrier's best parts and has since adopted the carrier's name.

The restructured airline will begin operating under a reshaped network and slimmed down employee base on January 13.

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