The bankrupt Italian airline Alitalia faces imminent collapse after a consortium of Italian industrialists this afternoon was reported to have withdrawn its offer to buy the carrier because of trades union opposition to proposed job losses as part of a restructuring plan.

Earlier the Italian Prime Minister Silvio Berlusconi said he thought the bailout plan for Alitalia could go ahead even without the approval of all nine of the airline's unions.

However, the consortium, the CAI, laid down a deadline of 15:50 for the unions to back it. As the deadline neared Maurizio Sacconi. Italy's Labour Minister admitted Alitalia's future was "hanging by a thread".

After the deadline passed Italian media, quoting CAI sources, said the group of investors, led by Roberto Colaninno, chairman of the scooter manufacturer Piaggio, was withdrawing its bid. With no other offers on the table, Alitalia's administrator, Augusto Fantozzi, said this would mean the airline now faced liquidation proceedings.

Mr Berlusconi has said the airline's 20,000 workers cannot expect generous redundancy packages in the case of liquidation. Mr Fantozzi said although previous deadlines had come and gone, this time Alitalia has no cash left to continue.

Alitalia needs €1.4 million a day for fuel and loses a further €2 million a day, adding to debts of €1.17 million. The CAI consortium had offered to inject €1.5 billion into Alitalia and merge it with Air One, Italy's second largest carrier.

Three of the four larger unions said they could accept the deal, but smaller ones, including those representing pilots and flight attendants, objected to the proposed loss of over 3000 jobs and new contracts laying down longer hours for the same pay

However, Fabio Berti , leader of ANPAC, the pilots union, said his members were prepared to make "extraordinary sacrifices" to persuade CAI to change its mind and return to negotiations. Mr Berlusconi said he still hoped for a "positive outcome" and announced that he would hold a press conference later today.

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