Time could be running out for Alitalia

Alitalia, which is estimated to be losing some 50,000 euros an hour (�34,000; US$60,000), says it now has only 200m euros of cash liquidity left.

The airline is desperate to start a cost-cutting restructuring plan.

But unions have so far refused to accept plans to cut jobs, and staff have instead gone out on strike.

Last week, Alitalia was forced to cancel hundreds of flights over three days as a result of the disruption, after it failed to reach agreement with the unions.

'Necessary sacrifices'

The Italian government, which owns 62% of the airline and is politically wary of plans to cut up to 16% of Alitalia's 20,000-strong workforce, was also involved in the talks.

Negotiations are now continuing.

"Alitalia can be rescued but it can also go bankrupt," said European Affairs Minister Rocco Buttiglione, who is taking part in the talks.

"Everybody must take a step back, everybody must be willing to make sacrifices that are necessary to relaunch and rescue Alitalia."

Industry Minister Antonio Marzano also warned that if an agreement was not reached on the turnaround plan, Alitalia might have to be put into state receivership.

The airline's continuing woes come as Air France officially announced its takeover of Dutch firm KLM.

Alitalia had initially hoped to join Air France and KLM in the alliance.