Alitalia flew into the unknown on Tuesday after Air France-KLM withdrew its takeover offer, leaving Italy's long-struggling flagship airline with little choice but to contemplate bankruptcy or receivership.

The French-Dutch giant shut the door on exclusive negotiations in an announcement late Monday ending three weeks of speculation that it might return to the table it left on April 2.

Alitalia, with little cash on hand and haemorrhaging funds, appears to have little choice but to go into receivership and almost certain bankruptcy.

Trading in Alitalia shares was suspended on Tuesday as the company was expected to issue a statement following the Air France-KLM pullout.

Outgoing Prime Minister Romano Prodi met key aides and Alitalia's ex-chairman Maurizio Prato on Tuesday, and a government official told AFP the full cabinet would meet on Wednesday.

Italian radio said transport and economy ministers Alessandro Bianchi and Tommaso Padoa-Schioppa and Prodi's secretary Enrico Letta were at the Tuesday meeting along with Prato, who resigned as Alitalia's chairman on April 2 after the airline's unions made counter-proposals that were considered untenable.

The outgoing government could decide to make an emergency bridging loan to the airline despite the threat of EU sanctions.

A European Commission spokesman said on Friday that Alitalia, which is losing about one million euros (1.6 million dollars) a day and had about 170 million euros in the bank at the end of March, could not receive state aid until 2011 under EU rules.

The crisis comes as Italy awaits the inauguration in mid-May of conservative leader Silvio Berlusconi as prime minister for the third time since 1994 after his coalition scored a comfortable victory in elections last week.

The Italian government has been trying for years to sell off its 49.9 percent stake in the airline.

It could decide to place the company in receivership, naming a special administrator who would decide whether to restructure the firm or begin bankruptcy proceedings.

Prodi wants the incoming government to approve any decision he takes, press reports said.

But Altero Matteoli, tipped to become Berlusconi's infrastructure minister, said on Italian radio: "The new government needs time to confront the situation," hinting that the new government would approve a bridging loan.

Alitalia's unions are clamouring for state aid to buy time to find an alternative rescue package.

"We hope for a loan under market conditions that will allow us to await the arrival of the new government and get six to nine months to find a taker," the vice president of the pilots union ANPAC, Stefano De Carlo, told AFP.

"The continuation of operations is an imperative," said the head of the left-wing CGIL union, Guglielmo Epifani.

Alitalia is also under pressure from the Italian civil aviation authority ENAC, which could withdraw the company's operating licence without assurances of its solvency.

Berlusconi, who said before the elections that he would reject an Air France-KLM takeover out of hand, preferring an all-Italian solution, has since said he would consider a tie-up as long as all partners were on an equal footing.

The media tycoon-cum-politician, who met Russian President Vladimir Putin last week, indicated that the Russian airline Aeroflot, which has expressed interest in Alitalia in the past, was once again a potential partner.