Alitalia's board will meet later today after the state-owned airline's sale to Air France-KLM fell apart and it teetered ever closer to bankruptcy.
Last night Air France-KLM abandoned talks with unions hostile to the takeover, just over a week before a general election, though it said it still believed in its takeover plan, which includes 2,100 job cuts.
A cabinet meeting is also expected to discuss developments today after Economy Minister Tommaso Padoa-Schioppa said the alternative to Air France-KLM was emergency administration.
The airline's future has become a key issue in the final straight of the general election campaign, and outgoing Prime Minister Romano Prodi said unions had made "a grave mistake" in breaking off talks.
Media magnate and opposition leader Silvio Berlusconi has said he would prefer a home-grown buyer and that there was such a group in the wings, though it has not yet emerged. Alitalia's shares will be suspended from trade today after closing down 5.7 per cent at €0.50 yesterday, giving it a market value of around €735 million.
Air France-KLM is the world's biggest airline by revenues, dwarfing Alitalia, but its interest in the Italian airline centres on the lucrative route from Rome to the country's financial capital, Milan.
Newspapers today speculated that the government, which holds 49.9 per cent of the airline, might seek a compromise with unions or search for a way to keep the carrier flying until after elections on April 13th-14th.