MILAN, Oct 10: Alitalia will go bankrupt unless a rescue plan is put in place within three months, Prime Minister Romano Prodi said on Tuesday, describing the finances of Italy’s flag-carrier airline as “completely out of control.”

”Alitalia is undergoing the most difficult period of its history,” Prodi said at a meeting with transportation unions, according to participants quoted by Italian news agencies. “The situation is completely out of control, and I see no parachute”.

“We have until the end of January to find a solution and avoid bankruptcy,” he said.

The company forecasts a heavy second-half loss this year after registering a loss of 221 million euros in the first half and faces the fate of other medium-sized national airlines that have gone under, such as Belgium's Sabena, Swissair and Air Lib of France.

Unable to stanch its losses -- 167 million euros in 2005 -- Alitalia did not even try to balance its books this year, with red ink expected to approach 300 million euros, according to an internal document quoted by the press.

Alitalia, which is 49 per cent controlled by the Italian government, has failed to turn itself around barely more than a year after raising one billion euros, covered by a group of banks and the state, to launch an ambitious restructuring plan.

What is more, relations with the unions began to nosedive with the plan, which called for 3,700 job cuts from the company's 20,000-strong workforce.

—AFP