Air France, Lufthansa still in running for Alitalia

An Alitalia plane approaches to land at Fiumicino airport in Rome in this March 25, 2008 file photo.

ROME (Reuters) - Both Air France-KLM (AIRF.PA) and Deutsche Lufthansa (LHAG.DE) remain in talks to buy a stake in Alitalia, the head of the group buying the Italian airline said, rejecting speculation that the French carrier had already sealed the deal.

"We are concluding our considerations on a foreign partner," CAI Chairman Roberto Colaninno told reporters after the group's board approved raising up to 1.1 billion euros ($1.42 billion) to finance the acquisition of the bankrupt Italian carrier.

CAI, a consortium of 16 top Italian business groups, has agreed to buy Alitalia's best assets for 427 million euros in a bid to relaunch it as a smaller, more efficient carrier.

The group plans to choose a foreign partner -- either Air France-KLM or Lufthansa -- to enter with a 20 percent stake and provide Alitalia operational backing on an international level.

Italian media have previously reported that Air France-KLM had already been chosen as that partner, but Colaninno said talks were continuing with both European rivals.

The prospective roles of both Fiumicino airport in Rome and Malpensa in Milan under an alliance with either would play a key part in the decision on which partner is chosen, he said.

Plans that affect airport hubs are controversial in Italy, and Alitalia's decision last year to cut back at Malpensa set off a backlash from politicians and workers in Italy's north.

The choice of Lufthansa as a foreign partner would be expected to help Malpensa remain a major hub for Alitalia, while Air France-KLM would be expected to favor Rome's Fiumicino airport.

"The considerations are ... so that Italian air transport can satisfy demand from Italy's north, from the Po valley, and so Malpensa will become an important point of reference for international, intercontinental and national flights," he said.

"As for Fiumicino, it will concentrate on Mediterranean traffic with intercontinental, international and national flights."

Colaninno declined to give a date on which CAI would take over Alitalia, after media speculation that the airline's relaunch could be delayed from December 1 to closer to Christmas.

Alitalia's bankruptcy commissioner has however said that the airline would be CAI's responsibility as of December 1 even if its rebirth were delayed.

Alitalia's two-year hunt for a buyer has been littered with delays, missed deadlines and sudden changes in fortunes.