Alitalia has rarely made a profit

Saying the government had done "all it could", Transport Minister Pietro Lunardi reminded the unions that 22,000 workers could lose their jobs.

His comments came as Alitalia managers prepared for a third day of talks with union representatives.

Alitalia, which has heavy losses, is surviving on government loans.

"Now the ball is with the unions. If they don't co-operate with the government, then 22,000 people will be out of a job," said Mr Lunardi.

In June the Italian government approved a state-guaranteed loan of 400m euros ($486m; �270m) to Alitalia, which is 62% state-owned.

But Alitalia is still running out of money, and the Italian government says it will not give any more.

Mr Lunardi urged the unions "to take a step back" from the brink.

Analysts said they were unsure whether the government was bluffing or genuinely prepared to let the carrier follow failed European airlines Swiss Air and Sabena into bankruptcy.

Alitalia made a net loss of 520m euros in 2003 after making a profit the year before.