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Italy seeks deal with banks for Alitalia - minister

MILAN (Reuters) - Italy is working on a temporary financial agreement with banks to keep struggling airline Alitalia afloat and put it in a stronger position to seek partners, daily Il Sole 24 Ore quoted Industry Minister Flavio Zanonato as saying on Thursday.

Since being taken private by a consortium of Italian investors in early 2009, Alitalia has accumulated net losses of more than 840 million euros ($1.1 billion), debt of about 1 billion euros and is fast running out of cash.

Alitalia's board is meeting later on Thursday when recently appointed CEO Gabriele Del Torchio is expected to seek approval for a 200 million-euro capital increase plus the same sum in fresh borrowing to keep the company from collapsing, sources close to the matter have said.

"Today the company has to be protected financially so that it can execute its restructuring plan and be able to strike alliances with others from a position of strength," Zanonato told the paper in an interview.

Italy was betting on top shareholder Air France-KLM (PAR:AF) making a cash investment and increasing the 25 percent stake it bought in 2009, possibly even taking control of the company, but any such commitment may clash with Italy's ambition to make Rome a transport hub for intercontinental flights.

Air France-KLM already operates two hubs out of Paris and Amsterdam and would be unlikely to want to develop a third one in Europe, analysts have said.

"It's not a given that only the French could put in capital," Zanonato said.

"We definitely must avoid that Alitalia is taken by buyers who have different strategic interests from those of our country," he said, adding that he did not want the carrier to become merely an appendix of another and be significantly downsized as a result.

(Reporting by Agnieszka Flak; Editing by Mark Potter)