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Air France-KLM Mum on New Alitalia Report

Air France-KLM declined comment on Tuesday on the latest in a series of newspaper reports that it remains interested in bidding for Alitalia.

Dutch newspaper De Telegraaf reported that Air France-KLM, once publicly interested in Alitalia but now increasingly distanced from its Skyteam partner, was demanding tough conditions were it to buy the beleaguered Italian carrier.

Italy scrapped its seven-month auction of the loss-making airline last week after the last bidders pulled out, and now faces dwindling options and growing political embarrassment over the sale's failure.

Air France-KLM, which is also interested in Spain's Iberia, is demanding that there be a clear plan for privatizing Alitalia and for financial restructuring, De Telegraaf reported. This is identical to the airline's longstanding position on Alitalia.

An Air France-KLM spokeswoman said the airline had nothing to add to its chairman's recent comments that Air France-KLM was not interested in Alitalia in the current conditions.

Privately, airline officials do not exclude any options but have been dismissive of the chances of a bid despite political and industry pressure from Italy to step forward. Italian newspapers contain almost daily speculation on a bid.

Several officials close to the group have said it is unlikely to change its mind barring a radical change in Italian government thinking and Alitalia's labor and financial woes, something they say they regard as unlikely in the short term.

"It is too late," a senior source close to Air France-KLM told Reuters earlier this month.

In Italy, however, the government is reported to be leaning towards a radical shake-up of the airline in a last-ditch effort to persuade potential buyers to reconsider.

Rome has said the airline could be shut down unless a buyer is found after the auction flopped, in an apparent warning to unions that have played a central role in deterring suitors.

Chronic Alitalia strikes, and Rome's perceived reluctance to allow a buyer free rein to slash its 20,000-strong workforce, have contributed to the absence so far of competitors like Air France-KLM and Lufthansa, industry officials say.