(Recasts with transport minister on date fixed for deal, adds detail, background)
ROME Aug 1 Italian airline Alitalia is due to clinch a tie-up deal with Abu Dhabi's Etihad on Aug. 8, Italy's transport minister said on Friday, in a deal Rome hopes will turn the loss-making flag carrier into a money spinner.
Italy's government is keen to sell a 49 percent stake in the Rome-based company to the Abu Dhabi airline and conclude talks which have dragged on for more than seven months.
"A date has been fixed for signing the deal: August 8," Transport Minister Maurizio Lupi said, adding that final details of the deal would be set in stone next week.
The board of Alitalia, which has failed to compete with low-cost airlines and high-speed trains and made a profit only a few times in its 68-year lifespan, met on Friday at Rome's Fiumicino airport.
Chief Executive Gabriele Del Torchio said after the meeting that the Italian airline's most recent proposal to Etihad on issues including how to deal with its 800 million euro debt pile had been well received by the prospective buyer.
"We have received a response from Etihad. It is positive, but some things still need to be cleared up," Del Torchio said.
Alitalia's board approved a capital hike of up to 300 million euros ($402.6 million) earlier on Friday, recommending shareholders raise a previously agreed limit by 50 million euros, a person close to the matter said.
At a meeting on Aug. 8, shareholders will also vote on the capital hike, intended to cover any losses the airline might make before a tie-up is finalised and pay for past liabilities.
The capital raising was one of a raft of conditions put forward by Etihad, which also demanded Alitalia cut some of its 14,000 staff, including the cabin crew who once wore uniforms designed by Giorgio Armani.
Italy's post office operator said on Thursday it would invest 70 million euros in Alitalia, via a separate vehicle which sources said would allow it to avoid taking on the company's debt and other liabilities.
State-owned Poste Italiane paid 75 million euros for a 20 percent stake last year as part of a government-engineered rescue package for the airline which became a political lodestone under former Prime Minister Silvio Berlusconi.
Etihad has never said how much it plans to pay for the stake in Alitalia, but Lupi said in June the Abu Dhabi-based company was prepared to invest up to 1.25 billion euros over the next four years to buy the stake and revamp the carrier.
Owning a chunk of Alitalia would give Etihad access to Europe's fourth-largest travel market and expand its reach in Europe, where it already has stakes in Air Berlin and Aer Lingus.
($1 = 0.7452 Euros) (Reporting by Antonella Cinelli and Stefano Bernabei Writing by Isla Binnie; Editing by Catherine Evans)