Troubled Italian airline Alitalia has applied for bankruptcy protection as it tries to agree a deal to ensure its long-term survival.
Losing 2m euros (£1.6m) a day, Alitalia has survived on a 300m-euro state loan.
Plans are being drawn up to split the carrier into two and to sell a stake in a new entity to a foreign airline.
Both Air France KLM and Lufthansa have expressed interest in investing in any new entity which emerges from the current business.
Profitable short-haul routes would be separated into a new business, controlled by a consortium of Italian investors including budget airline Air One which would effectively be merged with Alitalia.
Prime Minister Silvio Berlusconi has made Alitalia's continued ownership by Italian interests a precondition of any rescue deal.
Alitalia has been crippled in recent years by strategic indecision, poor industrial relations and soaring fuel costs.
Its shares were suspended earlier this summer while the firm has delayed the release of its 2007 accounts.
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