Air France-KLM has announced that the board of Alitalia has unanimously agreed to a takeover bid worth 138 million euros (Â£106 million).
Italian state airline Alitalia has long been in difficulty, making a loss for five consecutive years and currently having a 1.2 billion euro debt. The Italian government which owns 49.9 per cent of Alitalia shares, was also unable to sell the airline in an auction in 2007.
The offer by Air France-KLM values Alitalia shares at 0.10 euros per share, 81 per cent lower than the current value of Alitalia shares. Air France-KLM has said that it plans to pump 1 billion euros into its new acquisition in addition to 608 million euros to buy back Alitalia bonds.
In order to go ahead, the deal must secure support from the Italian trade unions and the Italian government must also agree to sell its shares in the airline. The deal also needs to receive the green light from Italian and EU competition regulators