Air France-KLM must be thanking its lucky stars - and the Italian unions and the country's new government - that its proposed acquisition of Alitalia never took off. The Franco-Dutch carrier had negotiated a deal with the previous government on the basis of an oil price of $86 a barrel. But since Silvio Berlusconi returned to power, oil prices have shot up. That would have made an already risky takeover even riskier. The Alitalia unions and the Italian media tycoon must be kicking themselves for being so hostile towards Air France-KLM. The unions opposed the tough restructuring conditions and guarantees sought by the Franco-Dutch airline. Mr Berlusconi used the Alitalia issue to win popular support in the election by posing as a champion of national interests. During the campaign he pledged to put together an Italian group of entrepreneurs and banks to save the airline by injecting fresh money and buying out the state's 49.9 per cent stake. He and his new ministers have continued making much political noise, yet there have been few concrete signs of an imminent Italian solution to salvage Alitalia. If anything, the beleaguered flag carrier's situation has been getting worse - not just because of its endemic labour problems, its ageing fleet, its inefficient hubs and a shrinking route structure, but also because with oil prices at exorbitant levels it is also all the other weaker airlines that are struggling to survive, even if they are not in the same dire straights as the Italian flag carrier.

Alitalia's losses have continued to increase in the first quarter of this year and the new government has rushed to the rescue with another €300m emergency loan to prevent it collapsing. The European Union is questioning the legality of this new loan, but this money is unlikely to make much difference to an airline losing €2m a day unless a credible solution is rapidly found.There have been reports that the Benetton family were thinking of joining in the Alitalia rescue. The problem is they already own stakes in Italian airports, including Alitalia's Rome hub. This could raise all sorts of conflicts of interest and objections. Roberto Colaninno, the former Telecom Italia boss and now head of the Piaggio scooter business, is also said to be considering heading an Alitalia rescue. But he is unlikely to take the plunge in the absence of cast iron guarantees similar to those originally sought by Air France-KLM.