Italy PM vows protests won't sway Alitalia sale

By Giselda Vagnoni and Deepa Babington

ROME (Reuters) - Italian Prime Minister Romano Prodi said Alitalia (AZPIa.MI: Quote, Profile, Research, Stock Buzz) would be sold to a group capable of folding the carrier into a global network, and promised regional protests would not sway his government's choice of buyer.

The comments were the latest boost to Air France-KLM's (AIRF.PA: Quote, Profile, Research, Stock Buzz) bid for the loss-making national airline, whose board last week backed the French company's bid over one from tiny Italian domestic rival Air One.

The centre-left government is divided on which bid to choose for the state's 49.9 percent stake in Alitalia and has been besieged by intense lobbying from unions and regional politicians who want it to remain in Italian hands.

The government has the final word on who gets the Rome-based carrier, which is losing more than a million euros each day.

Prodi reiterated his government would decide by mid-January on whether it too prefers Air France-KLM, and said the decision would be based on the "buyer's ability to integrate Alitalia into a global system".

"Now we have only two options and we have to choose the best," Prodi told a year-end news conference. "I'm sorry, but I won't take note of protests, or pressure from groups or corporate lobbying."

Alitalia's major unions and many Italian politicians, particularly in Italy's north, have stepped up lobbying against the Air France-KLM bid.

They fear Alitalia will be reduced to a regional airline that follows orders from Paris and jobs will be lost at Alitalia's Milan Malpensa hub. Air France has said it wants to develop Alitalia's Rome hub, while scaling back in Milan.