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Alitalia said on Wednesday it would present in 'a few weeks' new measures to carry out its 2005-2008 rescue plan to return the airline to profit after years of losses.

«Alitalia confirms that it is studying additional measures to implement the company's industrial plan, which will be ready within a few weeks to be subsequently presented,» it said in a statement.

It did not elaborate.

Alitalia is due to post its first half results on September 12 and analysts will be looking to see whether it will revive its profit forecast for this year.

A 2006 profit had been a pillar of Alitalia's rescue plan before it withdrew the forecast following disappointing first quarter results.

The airline's operating loss widened to EUR128.8 million euros (USD$165.3 million) in the first three months of the year as fuel costs and strikes weighed on results.

Revenues also fell just over 3 percent against the same period last year.

Still, speculation that upcoming bilateral talks between France and Italy might help shore up a long-awaited merger with Air France-KLM gave the airline's shares a lift on Wednesday.

Analysts have been speculating on a merger to help ensure the long-term survival of Italy's flag carrier, which has seen its stake of the domestic market fall from around 80 percent at the end of 1994 to just over half at the end of 2005.

Financial newspaper Finanza & Mercati said Alitalia and Air France-KLM will be on the agenda when Italy's Prime Minister Romano Prodi and French Prime Minister Dominique de Villepin meet on Friday. It did not name sources.

It also said the Italian treasury had prepared a decree ahead of the meeting that would allow the Italian state to sell its entire stake in Alitalia, which is currently just below 50 percent.

An Italian treasury official told Italy's ANSA news agency the report was «completely baseless.»

Alitalia did not comment on the report, the latest in years of speculative articles about a possible marriage between the carriers.

Alitalia shares rose more than 2 percent earlier in the session on the speculation, but gave back some of that gain to trade up around 1 percent in after hours trading.

Alitalia has blamed its troubles on a series of factors, including fuel prices, European deregulation, loss of slots at Milan's Linate Airport, antitrust decisions and even an «inadequate» government transport policy.

Unions, which are planning a 24 hour strike on September 7, have suggested that management is to blame and have called on the government to replace Chief Executive Giancarlo Cimoli.

(Reuters)