Alitalia hangs by a thread

Last-ditch talks to save Italian airline Alitalia pushed ahead Sunday, with prospective buyers, unions and the government struggling to agree on how to salvage the country's flag carrier.

If progress is made in the latest round of negotiations, a "final meeting" could be called Sunday at 1600 GMT, said Fit-Cisl union leader Claudio Claudiani.

Talks late Saturday and early Sunday yielded small advances, according to daily La Reppublica, which reported that potential buyers increased their salary package for Alitalia employees by 100 million euros (140 million dollars).

Italian Prime Minister Silvio Berlusconi has personally intervened in the talks, and on Saturday said Alitalia's closure would be a "disaster for the entire country".

He also accused the left-wing opposition of backing the "unreasonable behaviour" of the airline's employees.

The company has been living on state-funded life support, with Italian investors and unions having failed to agree on the salary, vacation and contract demands outlined in the current takeover package.

The investor alliance, with the Italian acronym CAI, foresees the dismissal of 1,000 pilots.

This is "completely unacceptable", said Massimo Notaro, president of one of Italy's two main pilot unions, UP, on Sunday.

On Saturday, special administrator Augusto Fantozzi -- appointed last month when the airline asked to be declared insolvent -- warned that Alitalia would no longer be able to guarantee flights starting Monday.

"Up to tomorrow we have guaranteed flights, but not on Monday because no-one will supply us with kerosene," Fantozzi said, according to union sources quoted by Italian news agencies.

In a statement later, Fantozzi denied he had been so alarmist but acknowledged "there are risks of supply difficulties which could threaten certain flights."

Alitalia, a national symbol for Italians since it was founded in 1946, has lurched for years from crisis to crisis, and from restructuring plans to the latest takeover rescue scheme.

Its collapse would be a severe political blow to right-wing Berlusconi, who had promised before the last elections that he would keep it flying under Italian control.

The last proposal, based on a takeover by Air France-KLM, fell apart in April when the French-based carrier -- the world's third biggest -- walked away from talks after unions rejected terms.

The Italian government owns 49.9 percent of Alitalia, which has been surviving on a state loan of 300 million euros made at the end of April.