Alitalia's future is under fresh threat after Air France said it was walking away from its proposed takeover bid.

Air France suspended talks with the troubled Italian carrier last month after it failed to get the necessary backing from unions for its proposals.

It has now dropped out altogether, saying the contractual basis for its initial offer was "no longer valid".

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The airline is currently losing 1 million euros a day and many experts believed Air France represented the only hope of preventing its ultimate financial collapse.

New Prime Minister Silvio Berlusconi has always backed keeping the airline in Italian hands and has asked banks and aviation groups to work together on a plan to help rescue the firm.

(BBC)

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