The Italian government is ready to sell part of its 62 percent stake in the country`s struggling flagship airline Alitalia to allow closer ties with Air France.

Italy`s Prime Minister Silvio Berlusconi has talked with French Premier Jean-Pierre Raffin on the need for consolidation in Europe`s airline industry and both men agreed that a stronger alliance between the two carriers was desirable, a government statement said.

The Italian airline already has a code-share arrangement with its European neighbor.

Their views were made known as Air France said it was at a critical stage in talks over an alliance with Dutch carrier KLM. The two leaders agreed that a deal with loss-making Alitalia could extend to any Air France/KLM alliance.

The Alitalia board is scheduled to meet today to examine its alliances with other airlines.

The French government is also poised to give up its majority share in Air France despite fierce opposition to privatization from public sector unions.

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