Alitalia to ditch troubled units

By Alberto Sisto and Gianluca Semeraro

ROME/MILAN (Reuters) - Italy's latest plan to rescue Alitalia includes seeking bankruptcy protection for its troubled units before resuming the hunt for a foreign partner, a political source said ahead of a crucial week for the stricken airline.

After sputtering through the summer thanks to an emergency loan, Alitalia is expected to admit it has sunk deeper into the red when it reports first-half results next week. , when Italy's cabinet is also expected to address the airline's fate.

A list of Italian investors for a reshaped Alitalia stripped of its loss-making units could also be unveiled as early as next week, another source close to the situation said.

Italy is also studying British Airways (BAY.L), former bidder Air France-KLM (AIRF.PA) and Lufthansa (LHAG.DE) as potential partners for an eventual alliance, the source said.

However, British Airways, which has not previously been involved in Alitalia's long-running sale, would not consider a partnership with Alitalia, an industry source said. A BA spokeswoman said it did not comment on market speculation.

Air-France-KLM and Lufthansa had no comment.

"Air France (AIRF.PA) is an international option being studied along with Lufthansa (LHAG.DE) and British Airways (BAY.L)," the source close to the situation told Reuters on condition of anonymity.

This source added it was not clear whether any of the foreign airlines had been approached to partner Alitalia under the latest plan being put together by adviser Intesa Sanpaolo.