Italy’s centre-right government is set to approve the controversial sale of lossmaking Alitalia to a group of Italian investors in spite of complaints by rival airlines of illegal state aid and accusations that its assets have been undervalued.

Augusto Fantozzi, the administrator overseeing the flag carrier’s bankruptcy, said he had received the green light from a government committee that had determined that the offer from Compagnia Aerea Italiana (Cai) was in line with market prices. Formal government approval is expected shortly.

Cai, headed by Roberto Colaninno and numbering 16 Italian businesses, says its offer is worth about €1bn ($1.26bn), made up of about €275m in cash and the balance in taking on part of Alitalia’s debt. Only €100m is to be paid up front.

Cai is acquiring Alitalia’s prime assets, including 80 aircraft, the brand, its slots and traffic rights. Several thousand jobs will be cut. The new Alitalia will be merged with its smaller rival, Air One, giving the new airline a near monopoly on some routes.

Opposition politicians accuse Silvio Berlusconi, the prime minister, of setting up a sweetheart deal for the Italian consortium, which is in advanced negotiations to sell a 20 per cent stake to Air France-KLM immediately and a controlling stake in the longer term. Mr Berlusconi, campaigning for election last April, promised to block a takeover by Air France-KLM and to keep the airline in Italian hands.

The Italian media has noted that Banca Leonardo, adviser to the government on valuing the airline, has two members of Cai on its board, and that Antonio Tajani, European Commissioner for Transport who approved the conditions of the sale, is from Mr Berlusconi’s Forza Italia party.

The government owns 49.9 per cent of Alitalia. Rival airlines intend to challenge what they call illegal Italian state aid in the courts. Ryanair has condemned the EC decision as a “farce” and a “blatantly corrupt” decision.

“Fantozzi is giving a Christmas present to Cai,” commented Gianni Rossi, chief executive of Meridiana, Italy’s third-largest airline.

He told the Financial Times that Meridiana had made an offer to Mr Fantozzi for aircraft and slots at Milan’s Linate airport, but that he got no reply.

Slots – allocations of landing and take-off times – are a legal and financial grey zone. Airlines do not own slots outright, but in practice they carry a market value. BMI British Midland, being bought by Lufthansa, had valued its slots at £770m ($1,160m).

Cai said it put a zero value on Alitalia’s slots. Mr Rossi said he estimated the value of Alitalia’s slots at €400m. A study by the non-profit Bruno Leoni Institute estimated €550m to €900m.

Last December Alitalia sold three pairs of slots at Heathrow, Europe’s most congested airport, for €92m. It has 10 more pairs.