Alitalia was placed into bankrupty protection yesterday in a move that marks the beginning of the break-up of Italy's national airline.

The board's move to put the airline into administration will allow Roberto Colaninno, the turnaround expert who is its newly appointed chairman, to start immediately the process of dismantling the struggling carrier.

“Alitalia is finished,” Mr Colaninno said yesterday. “There is nothing left.”

His remarks do not mean that the airline is about to crash entirely. Mr Colaninno will take the profitable and near-profitable parts of Alitalia and move them to another company — a strategy that was made possible only on Thursday when the Italian Government changed the bankruptcy laws to allow the protection of assets from creditors.

Silvio Berlusconi, the Prime Minister, made the survival of Alitalia an election pledge this year and has brokered a complex deal to keep the airline flying. It will be rescued from bankruptcy by a group of Mr Berlusconi's billionaire friends — a strategy criticised by rival airlines, which believe that the deal amounts to illegal state aid.

Several are understood to have asked the European Commission to block the deal, but analysts note that a key figure in the decision-making process is Antonio Tajani, the European Transport Commissioner, who is a former spokesman for Mr Berlusconi.

Alitalia has been struggling for years and the rapid rise in fuel costs over the past 12 months has led to losses estimated at about €1 million (£808,000) a day. The airline's debts stand at more than €1 billion.

The new Alitalia, likely to be about 40 per cent of the size of the existing, bloated business, will be backed by 16 of the Prime Minister's friends, who will pump €1.5 billion into the carrier. The domestic and European services of the new company will be merged with Air One, a smaller, private Italian airline. International routes will be offered in a partnership deal with another airline — Air France-KLM and Lufthansa have expressed their interest already. Air France, which owns 2 per cent of Alitalia, made an offer to buy Alitalia this year but the deal collapsed after unions refused to accept the proposed job loses.

Mr Berlusconi also wanted Alitalia to remain Italian and national pride has driven his attempts to keep the national flag carrier in the skies. However, this strategy could prove expensive for Italian taxpayers, because the unprofitable rump of Alitalia —including some unprofitable local routes and ground functions, such as baggage-handling - will be retained by the Government, along with the debt.

Intesa Sanpaolo, an Italian bank, will try to sell these divisions, but aviation analysts expect that eventually the Government will have to close most of these businesses, at huge cost.

Mr Berlusconi said on Thursday: “Our actions allow us to create a new Alitalia, a more efficient, high-tech airline, able to support itself.”

However, a source familiar with the rescue plan was less optimistic that the rescure would be completed so easily. He said: “This soap opera has some way to go because there is no certainty that the unions will accept it. Implementing this plan is going to be horrendously difficult and full of controversy. It's a typically Italian mess, really.”

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive