With fuel and cash running out, hopes rose today that the Italian airline Alitalia might still be saved from liquidation after several trades unions said they were reconsidering their rejection of an offer by an Italian consortium.

The CAI (Italian Air Company) consortium last Thursday withdrew a one billion Euro takeover offer when only three out of nine Alitalia trades unions accepted the deal. The other six, including the pilots' and air crew unions and the left wing CGIL union demanded further talks on proposed job cuts, which both the consortium and the Italian government ruled out.

However ANPAV, a cabin crew union representing stewards and stewardesses, said that it was ready to return to talks. The head of CGIL, Guglielmo Epifani, said he hoped the centre Right goverment of Silvio Berlusconi would persuade the consortium to return to the negotiating table. "I know this is very difficult, but the government has a duty to try," he said.

Alternatively the government should launch "immediately, and in a transparent way, the process of selling Alitalia to a big foreign company" Mr Epifani said. On the othe hand both Augusto Fantozzi, the government-appointed "extraordinary commissioner" running Alitalia, and Mr Berlusconi have said no foreign buyer is on the horizon.

Today Mr Berlusconi insisted there was "no alternative" to the CAI offer. "It is either that or liquidation" he said. He added that the major European flag carriers had made clear they were "not interested.......Soon the pilots and the flight staff will realise that there is no alternative to the CAI offer. I hope common sense will prevail".

La Repubblica said that Mr Berlusconi's prestige was on the line, not only as Prime Minister but also as an entrepreneur and self made billionaire who had promised Italians he could apply his skills as an industrialist to the economy and create jobs by stimulating investment.

Italian newspapers reported that the exultation of Alitalia staff over the collapse of the CAI deal had given way to "tears and fears of redundancy" over the weekend. But in an interview with Corriere della Sera Maruska Piredda, the stewardess shown on Italian television and newspaper front pages beaming and punching both hands in the air as the news of the failure came through, said she did not regret her reaction.

Ms Piredda, 32 and a single mother with a daughter of eleven, said she had voted for Mr Berlusconi in last April's election but was now "profoundly disillusioned and very angry". She said she had been taken on by Alitalia on a temporary contract a year and a half ago, working up to 94 hours a month for 2500 Euros. Under the proposed deal she and "many others" on temporary contracts would have had to work longer hours for less, Ms Piredda said.

The Labour Minister, Maurizio Sacconi, said bankruptcy was "inevitable" if the CAI withdrawal was confirmed. Tomorrow the National Civil Aviation Authority (ENAC) is to meet Mr Fantozzi and the Alitalia management to examine the company's viability, and could withdraw its operating licence by the end of the week.

A takeover offer from Air France-KLM was rejected by the unions in April, and was also dismissed by Mr Berlusconi, who said he preferred an "all Italian solution". The Italian government has spent five billion Euros over the past 15 years to keep Alitalia flying but it is barred by European Union regulations from further subsidiies. Alitalia loses over 2 million Euros a day.

It remains unclear whether ANPAC, the pilots union and crew, will give ground over working practices which currently guarantee Alitalia pilots average flying hours lower than those for British Airways, Lufthansa or Air France pilots. In addition Alitalia pilots receive generous perks including six weeks of holiday a year, chauffeur-driven cars to and from airports and free flights for family members.

Mr Fantozzi told Il Messaggero, the Rome daily, that from tomorrow he would begin "public sale procedures" for Alitalia by advertising the airline for sale in the wake of the CAI withdrawal. He said he had so far received no offers for Alitalia's flight activities but had received "expressions of interest" in its maintenance, cargo, handling and catering units and its call centre.

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