Will Air France-KLM be tempted - again?

Don't hold your breath, but it seems as though the on-off-on-off again marriage between Air-France-KLM and the cash-strapped airline Alitalia could be on again.

The Italian government in Rome has put together a package that has had the seal of approval from the European Commission, and Air-France-KLM has given signs that it could once again be tempted to invest.

The principal actors in this ongoing saga that would surely be the pride of any US soap opera writer are of course Italy's prime minister, Silvio Berlusconi, the country's troubled national carrier, Alitalia, the Franco-Dutch consortium Air-France-KLM, the European Commission, 16 new investors and lots, yes really LOTS of money.

Alitalia is a business investor's nightmare. And it has been for quite a while now. It has a debt of around €1.2 billion, loses more than €1 million a day and hasn’t notched up an annual profit since 1999. Its shares have been suspended since June and it has lost a cool €400 million just since the beginning of this year.

If those figures were not bad enough, it also has a fleet of notoriously ageing, gas-guzzling aircraft and a 20,000 plus workforce that seems to spend as much time on the ground striking as it does in the air flying.

Little wonder then that the government in Rome has been so keen to offload it and has been looking for a deal to save it for the best part of the last 18 months.

In fact there have been two previous attempts to sell it. Both of them involved Air France-KLM and both failed.

The most recent one was in April, when the Franco-Dutch group threw in the towel frustrated over unions' refusals to accept proposed job losses. It had also discovered that the unions were still apparently trying to seal a deal with an Italian buyer – not that there was any sign at the time of one able to cough up the necessary cash.

The solution now on the table is perhaps a lesson on how to do business Italian style, as the government of Italy's prime minister, Silvio Berlusconi, has come up with a rescue package extraordinaire - as promised in his electoral campaign earlier this year.

The latest plan would see the existing airline broken up and bankruptcy declared for those sections that are losing the most money.

The Italian government has already pushed through changes in its bankruptcy laws this week to allow the rescue operation to take place. It involves dismantling the old company and creating two new ones.

One would have the backing of 16 domestic investors, a group put together by the Italian bank, Intesa SanPaolo. The other would take on all the debt and be put into liquidation.

There would be job losses of around 7,000 or 40 per cent of the workforce, although the government is hoping that any layoffs could be absorbed by other state-owned companies.

The new company that would rise from the ashes of Alitalia, would become a regional airline serving mainly southern Europe and would need investors to cough up a whopping €1 billion.

This is where Air France-KLM could come in. There is an alternative - the German carrier Lufthansa - but the Franco-Dutch group has always been the most likely possible partner according to industry insiders.

And at the moment it appears as though the company could be persuaded up the aisle - yet again - after the release of a statement on Thursday in which it announced that it would be "willing to take a minority stake in the new company of investors currently being put together by Intesa SanPaolo if that package was confirmed."

In other words if it sees that there's a realistic chance of its investment in the new company returning a profit.

Berlusconi's solution even has the thumbs up from the EU transport commissioner, Antonio Tajani, because it apparently it doesn't contravene stringent EU regulations of a country offering state support to a carrier. And instead it's being welcomed as a way to boost competition among airlines within Europe.

If all goes to plan and hands are shaken, contracts signed and the deal done, the "new" airline could be in operation by next month.

So, will Air France-KLM be tempted again?

Don't hold your breath too long, but it looks as though it's on the cards.