With the Thursday deadline looming for Alitalia to present a new rescue plan or lose its operating licence next week and see more than 19,000 workers sacked, Berlusconi cancelled a visit to the UN General Assembly in New York to attend to the crisis.

The commissioner overseeing Alitalia's bankruptcy, Augusto Fantozzi, told reporters he was 'reasonably optimistic' that a deal to sell some assets to the CAI consortium, which withdrew its rescue offer for the airline last week, could be revived.

An agreement with unions could be struck as early as Sept 30, he said.

In separate meetings, Mr Berlusconi's aide Gianni Letta held talks with CAI executives, union officials and former Alitalia CEO Francesco Mengozzi, now a consultant to Air France-KLM.

The talks with Mr Mengozzi focused on Air France-KLM taking a stake of between 15 and 25 per cent in the CAI consortium if it revives its bid for Alitalia, a source close to the talks said.

It was not clear whether the reported proposal carried the official backing of Air France-KLM, whose board is expected to meet on Thursday to discuss management changes.

Air France-KLM had previously been negotiating with CAI for a stake closer to 10-15 per cent.

Much depends on whether a deal with Alitalia's notoriously combative unions can be reached and if so, on how much each CAI partner would invest in a revived bid.

Late night talks
As meetings continued late into the night, a source close to the talks said the head of Italy's biggest union CGIL, which rejected CAI's conditions of 3,250 job cuts and downgrades in contracts, was now inclined to accept the offer.

CGIL boss Guglielmo Epifani was expected to join three other labour groups which have already given their greenlight to the rescue plan at a meeting at Mr Berlusconi's office on Thursday, the source said.

But it remained unclear whether five smaller unions, representing pilots and cabin crew, could be persuaded to sign up to a deal they have so far opposed.

Pilots' representatives also met Mr Letta late on Wednesday but declined to comment to reporters after the talks. 'It's a delicate moment,' one of them, Mr Massimo Notaro, said.

Italian media also reported revived interest from Lufthansa - despite its repeated insistence it will not make a direct acquisition unless Alitalia's problems are resolved - and, unexpectedly, from Venezuelan airline Aserca.

Aserca denied that it planned to come to Alitalia's aid.

Mr Berlusconi said the CAI consortium remained the only option, however, although Air France-KLM, British Airways, and Lufthansa would be welcome to take a minority stake if CAI succeeded. Air France and Lufthansa said they had no comment.

Cabinet ministers, who had been gloomily saying there was little chance of a reprieve for the CAI offer due to union opposition, sounded more upbeat.

'It's too much to talk about optimism, but you could say hopes have been revived,' Transport Minister Altero Matteoli said, afterMr Letta met CAI executives.

Mr Berlusconi, insisting Italy must 'continue to have its own flag carrier,' warned 'there is no possibility of any foreign airline taking upon itself the burden and responsibility of all of Alitalia. This hypothesis doesn't exist and never has.'

The media mogul returned to power in May promising to rescue the airline, which has not made a profit since 1999 and loses about 2 million euros (S$4.2 million) a day. He rallied local investors behind the CAI rescue bid but this was withdrawn last week.

In a last attempt at finding a buyer, Mr Fantozzi has invited offers for all or part of Alitalia by Sept 30, eliciting some interest in buying or leasing aircraft and taking over slots.

'I don't have three months to survive. If ENAC asks me for three months' liquidity to keep the licence, I don't have it,' Mr Fantozzi told a parliamentary hearing, ahead of Thursday's deadline for presenting a plan to aviation authority ENAC.

Two previous attempts to sell the state's 49.9 per cent stake in the airline have failed. The second attempt led to a takeover deal with Air France, but was blocked by unions and then opposition leader Mr Berlusconi. -- REUTERS