CAI, the government-backed investor group that is leading Alitalia's rescue plan, said it could not reach an agreement with the unions.

Union officials had hoped to return to the negotiating table later on Friday despite "insurmountable difficulties".

If no deal is reached, the commissioner in charge of restructuring the airline will liquidate its assets.

While CAI did not formally withdraw from the talks, a spokesman said: "CAI notes that, after seven days of meetings, conditions are not right to continue talks with unions on the execution of the Alitalia rescue plan."

The impasse is thought to relate to the scale of job losses, work contracts and salary cuts.

BBC