Air France-KLM close to Alitalia investment deal

PARIS/ROME (Reuters) - Air France-KLM was close on Wednesday to taking a stake in Alitalia, two sources close to the matter said, edging out rival Lufthansa as their contest drew to a political finale in Rome. Barring a last-minute and improbable upset, Air France-KLM was set to carry off a deal with its Skyteam alliance partner despite intense lobbying by Lufthansa which had won the support of Italian Prime Minister Silvio Berlusconi, the sources said.

However talks continue and "nothing has been signed," one of the sources said, asking not to be identified.

A second source with knowledge of the talks said a deal with Air France-KLM was "almost closed" and that both sides would hold Friday board meetings to sign off on the deal.

Air France and Lufthansa have competed for months for a stake of up to 25 percent in a revamped version of Alitalia, which went bankrupt last year and will be relaunched next week after being integrated with Italy's Air One under new owners.

Reports say a stake could be worth up to 300 million euros (272 million pounds), higher than the 250 million originally mooted.

Roberto Colaninno, chairman of the CAI investor group which recently bought a cleaned-up version of loss-making Alitalia, with the rest going into receivership, was due at Berlusconi's office later on Wednesday to outline his industrial plans.

The choice of Alitalia's new partner will also be discussed, a source close to CAI said.

Those talks could be followed by further lobbying from Lufthansa's political backers from the north of Italy, where it wants to focus operations. But the chances at this stage of a deal between Alitalia and Lufthansa are remote, sources said.

The head of the Italy's Northern League, Umberto Bossi, is expected to press Berlusconi to pressure CAI into picking Lufthansa instead of Air France-KLM.