The EU approved the share issue plan back in June

As part of a recapitalisation plan, Alitalia is going ahead with a 1bn euro new shares issue, with the government buying almost half the stock on offer.

Rival carriers have argued the move breaks rules on state aid, but it has approval from the European Commission.

The troubled airline needs the cash injection to allow it to keep flying.

Loss-making

Trading in the airline's existing shares was suspended after they fell 10% in Friday trading before the market's official opening, as investors failed to warm to the recapitalisation plans.

Alitalia, which made a loss of 800m euros last year, is continuing efforts to return to profitability and turn itself around.

It has an ongoing three-year cost-cutting programme that will see the loss of 3,700 jobs.

The share issue was initially planned for the summer, but was postponed in the face of high global fuel costs.

Previous support

Once all the shares are issued it will have the knock-on effect of reducing the Italian government's stake in Alitalia from 62% to less than 50%.

The carrier's existing shareholders will be able to buy 13 of the new shares for every two they currently own, while owners of Alitalia debt will be able to purchase 13 shares for every 60 securities they hold.

Rival airlines say the Italian government's planned purchase of 489.2m euros worth of new Alitalia shares represents illegal state aid.

European Union rules prevent European airlines from receiving state aid more than once, under the principle known as "one time, last time".

Alitalia was given financial support by the Italian government in 1997.

The Commission judged in June that Rome's part in the new share issue did not break state support guidelines.