Following the demise of its "virtual merger" with KLM, Alitalia is likely to accelerate negotiations with Air France, according to insiders at the Italian flag carrier.

"We have, we are, and we will" says one French executive when asked if they were talking to the Italian carrier. However, officials stress that the projected privatisation of Alitalia must be finally resolved first. European airlines are wary of dealing with the Italian airline while rivals still have the opportunity to take a stake.

A London-based analyst speculates that falling profits and the debacle over the merger with KLM may also lead to a change at the top, with incumbent Alitalia chief executive Domenico Cempella possibly replaced ahead of the privatisation.

Lufthansa, meanwhile, has ruled out any interest in Alitalia, but has confirmed that serious negotiations are under way with the flag carrier's rival, Air One, over a possible alliance. Lufthansa already holds a 27% stake in Italian regional operator Air Dolomiti. SAir Group is going to merge its part-owned Italian carriers, Air Europe and Volare.

Meridiana, the second largest Italian carrier, is also seeking an international equity partner. Although previously linked with BA, Meridiana's fate now appears to be bound up with other European majors, in view of BA's decision to sign up start-up National Jet Italia in Rome as a franchise partner.

Source: Airline Business