Italy's near-bankrupt Alitalia was thrown a lifeline on Friday when its board members - including cautious top shareholder Air France-KLM - approved a capital increase as part of a government-led €500m bailout.
The 'yes' vote means Alitalia's planes can keep operating beyond the weekend, something that had looked in doubt after major creditor Eni threatened to cut fuel supplies unless the airline could show it had solid financial underpinning.
But with Alitalia, which last turned a profit in 2002, spending some €10m a day according to analyst estimates, the new cash injection will not last long. It is regarded as a stop-gap solution before talks start with Air France on a possible combination of the two.
Italy's cash-strapped government only finalised the emergency funding plan for Alitalia late on Thursday - after being turned down by several national companies - when it persuaded the state-owned post office to step in with €75m via a wider 300-million capital increase.
If Air France, which has a 25pc stake in the airline but is in the middle of its own restructuring, underwrites its own full quota of the capital increase, it will provide another €75m.
Transport Minister Maurizio Lupi said the remaining €150m will come from Alitalia's other existing shareholders. In any case, that amount will be guaranteed by banks UniCredit and Intesa Sanpaolo, sources close to the matter had earlier told Reuters.
A further €200m will be provided in the form of restructured loans, the sources said.
Board member Maurio Traglio said the emergency funding plan had been backed by all of the shareholders sitting on the board, including the Franco-Dutch carrier. Lupi confirmed that.
Air France, which had earlier said it would place tough conditions on giving any help, declined to comment on the outcome of the board meeting.
The carrier was barred from a full takeover of Alitalia in late 2008 by then prime minister Silvio Berlusconi who instead strung together a disparate group of investors. In the intervening five years Alitalia has lost €700,000 a day.
Now the government and Alitalia's shareholders are ready to let Air France up its stake and possibly even take over the group, but the parties have so far failed to agree financial commitments and business strategy.
Business leaders said the state-funded plan lacked a clear strategy to make the airline a long-term viable business.
"If it's an emergency band-aid to stop the bleeding, so be it. But we'll need to have a serious think about a plan in the medium and long term once and for all," said Giorgio Squinzi, the head of business lobby Confindustria.
Air France-KLM Chief Executive Alexandre de Juniac is open to taking over its Skyteam alliance partner to bolster its access to the Italian travel market, Europe's fourth largest. But approval from his board, which includes the French state and sceptical members of KLM, is less certain.
The Rome government is realising it may not be able to hold on to its flag carrier, once a national icon which had its uniforms designed by Armani but now seen as a symbol of the country's economic malaise.
However, with the current loan arrangement, Rome is trying to strengthen its negotiating position in view of a politically sensitive deal with Air France-KLM, analysts say, even though no other option makes business sense.
"The state is re-nationalising its flagship airline with taxpayer's money. Of the €500m to be injected, €300m are new debt," said Andrea Giuricin, a transport analyst at Milan's Bicocca university. "This solution will only allow Alitalia to survive, certainly not grow."
At stake: What the government says is a strategic asset, 14,000 jobs, and fears that some of Alitalia's domestic routes - which play an important role because of Italy's patchy rail and road links - could be cut if a foreign buyer took over.
Suggesting the Italian government was worried Alitalia could be consigned to regional carrier under an Air France merger, Lupi wrote on Twitter: "The government wants to ensure citizens and businesses continue to fly worldwide from Milan and Rome, and not on a regional carrier that would only take them to Paris and Amsterdam."
The head of a European airline, who asked not to be named, said: "The logical way to save Alitalia is for Air France to take over the basic operating core and attach it to its own system, but this means getting rid of the entire Alitalia back-office structure and I don't know if the Italians are ready for that."