PARIS: Air France-KLM and Alitalia

PARIS: Air France-KLM Chief Executive Jean-Cyril Spinetta said Thursday the airline recently began talks with Alitalia SpA that may lead to the opening of merger discussions.

Spinetta said merger talks will go ahead on three conditions: a confirmation of Alitalia's financial turnaround, the assurance that both companies share a strategic vision and the determination of potential synergies from a merger.

"Only if we have positive answers to these three points will we open merger talks with Alitalia," Spinetta said.

Speculation has been rife that Alitalia could be a possible partner for Air France-KLM, itself the result of a merger between the French and Dutch national carriers two years ago. Spinetta told reporters he was addressing recent market rumors.

Meanwhile, Italian Prime Minister Romano Prodi said in a newspaper interview published Thursday that he has doubts about the possible tie-up.

"I have always supported contacts between the two groups," Prodi told French daily Le Figaro. "Now, I have a lot of doubts."

"I would like to know Air France's real intentions," Prodi said. "Does it want to create a big European transport group in which Italy would have a place, or simply grab the Italian air transport market, which is large and very lucrative?"

The struggling Italian carrier said last month it had given a mandate to Chief Executive Giancarlo Cimoli to immediately begin studying options for strategic accords with other unspecified carriers as it seeks to turn around mounting losses.

Spinetta said that the tieup of Air France-KLM was "proof that companies from different EU countries can create value together."

He also said that the Air France-KLM deal demonstrated that "consolidation is possible and can strongly improve financial results."

"Consolidation in Europe is not finished," he said.

Alitalia is already a member of the SkyTeam global alliance of air carriers, which includes Air France, KLM, Continental Airlines, CSA, Delta Air Lines, Aeromexico, Korean Airlines and Northwest.

Prodi was due to meet French President Jacques Chirac on Friday for talks in Lucca, Italy.

Relations between Italy and France were strained earlier this year when Italian power group Enel SpA appeared to be blocked in its attempt to take over part of French rival Suez SA.

Prodi said "friendly discussions" are now needed between the two countries.