The Italian government agreed on Friday to relaunch the sale of struggling flag-carrier Alitalia which is in a "critical" state, Economy Minister Giulio Tremonti announced.

The government accordingly has decided to speed up the sale, he said, adding that with the privatisation decree approved, the Alitalia board will meet on Tuesday.

The bank Intesa Sanpaolo will advise Alitalia on the sale, Tremonti said.

"The role (for Intesa Sanpaolo) is that of a consultant to find a solution and, possibly, to help it carry it out," he said.

Asked about a timetable for a sale, Tremonti said: "The sooner, the better."

The future of the airline has been in doubt since Air France-KLM dropped a plan to buy Alitalia earlier this year, with new Prime Minister Silvio Berlusconi, elected in mid-April, promising an Italian solution to its problems.

The government has a 49.9-percent stake in the airline, which is losing more than two-million euros ($3.1-million) a day.

The decision comes on a European Union deadline for Rome to clarify an earlier decision to grant Alitalia an emergency loan of €300-million to keep it afloat until its future was decided.

On Thursday, the Italian government said the loan would throw the national carrier a 12-month lifeline.

Brussels has raised doubts about the loan, saying that Alitalia was not entitled to more state aid since it had been bailed out previously.

The European Commission said on Thursday it was still waiting for Italy to respond to its queries on the loan.

"We're waiting for the Italian authorities to give us the requested information," a commission spokesperson said. "They've got until Friday midnight local time (10.00pm GMT) to do it."

AFP