Air France-KLM may buy a minority stake varying between 20 and 25 per cent in beleaguered Italian flag-carrier Alitalia.

This was reported by the Dow Jones, citing a report in the Italian newspaper Il Corriere della Sera, which said that the development could take place by next week. 

The Italian newspaper also said in its report that Morgan Stanley is evaluating an investment of up to $73.2 million in Alitalia along with a consortium of Italian investors.

British Airways was also reported by the UK media to be mulling a stake in the Italian airline. 

Alitalia had filed for bankruptcy protection from last week, and the Italian government had appointed law professor and former minister Augusto Fantozzi to restructure the company and sell assets.

Fantozzi would be in charge of liquidating Alitalia's liabilities, along with the $1.8 billion debt that the airline has accumulated over time.

Alitalia's bankruptcy protection request is a necessary part of the rescue plan devised by Italian banking giant Intesa Sanpaolo, which was given the mandate by the Italian government to act as an advisor for Alitalia. In its advisory capacity, Intesa said that the carrier should be split in two, with the potentially profitable assets being sold to a new company that would be formed by a consortium of Italian investors.

The consortium of Italina investors is lead by the chairman and chief executive of two – wheeler manufacturer Piaggio, Roberto Colaninno, and has pledged an estimated $1.5 billion to a new company. Christened Compagnia Aerea Italiana, the new entity will offer to acquire viable assets of Alitalia. 

The investor group is also said to be in talks with Carlo Toto, head of the privately held airline Air One, about the possible sale of Air One. Intesa Sanpaolo's plan for Alitalia calls for the investors to buy Alitalia's viable assets, and subsequently merge with Air One.

Italian media has reported that the consortium will wager around $440 million for Alitalia aircraft, leasing contracts and slots. Compagnia Aerea Italiana will invest $952 million to commence operations by late October 2008. 

The loss-making part of Alitalia would be part of the second company, which would be liquidated by the government – appointed administrator, in this case, Fantozzi.