Alitalia has announced that Aristide Police has been appointed to be its new chairman.

The Italian airline's previous chairman, Maurizio Prato, resigned on Wednesday after talks for a takeover by Air France-KLM collapsed.

The ailing airline said it would be assessing its finances and would inform the Italian government by 8 April whether it is able to continue operating or not.

The original takeover talks fell apart after failure to reach an agreement with Italian trade unions. Subsequently the unions have said they would be willing to begin negotiations again.

The Italian government, who own 49.9 per cent of Alitalia have also said they will find out if Air-France-KLM's withdrawal from talks is final, reports the BBC.

On Thursday trading in Alitalia shares was suspended.

The troubles at Alitalia come just a few days before a general election in Italy. The current Italian government has been trying to sell its stake in Alitalia for over a year however prime ministerial candidate and previous incumbent, Silvio Berlusconi, has opposed any sale of the government's stake.