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Alitalia Files for Bankruptcy Protection

Alitalia said Friday it has filed for bankruptcy protection, taking the first step in a plan to restructure and downsize Italy's failing national carrier.

Alitalia said in a statement that its board had asked the government to appoint an administrator and had declared insolvency to a Rome court.

The airline has been losing almost $3 million a day—hurt by labor unrest, competition from budget airlines and high fuel prices. Its shares have been suspended from trading since June.

The government has been trying to sell its 49.9 percent stake in the airline following a failed bid by Air France-KLM earlier this year.

It has been involved in negotiations to save the carrier, but the plan reportedly envisages a breakup of Alitalia.

The profitable assets would reportedly be taken over by a group of Italian investors ready to inject about $1.5 billion into the airline. The remaining assets would then be spun-off into a separate company for liquidation.

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