ROME (Reuters) - Air France-KLM's bid for loss-making Alitalia includes a share swap and a capital hike of 750 million euros ($1.09 billion), with up to 1,700 job cuts, Air France's Chairman Jean-Cyril Spinetta was quoted as saying.
Italian newspapers reported on Sunday that Spinetta, speaking to Italian reporters in Paris, said the deal would allow the Rome government -- which is selling its 49.9 percent stake in Alitalia -- to take a minority stake in the new group.
"We have proposed to Alitalia a share swap, which means that Alitalia will become fully part of the holding with Air France and KLM," Spinetta was quoted as saying by Corriere della Sera.
Air France-KLM and small Italian airline Air One are the two top contenders to buy Alitalia, which loses more than 1 million euros a day and is burdened by 1.2 billion euros of debt.
The Franco-Dutch airline, one of the world's largest, was not immediately available to comment on Spinetta's remarks, which appear to be aimed at winning over Italian politicians and unions who are concerned about putting Alitalia in foreign hands.
Alitalia's shares tumbled to record lows on Friday after it emerged that Air One was bidding just 1 euro cent a share while Air France had offered 35 euro cents a share -- less than half Alitalia's closing price of 0.75 euro on Friday.
Alitalia, whose main attraction for buyers is its dominance of the lucrative route between Milan and Rome, has put off a decision on which offer to pick until December 18, after the government failed to identify a preferred partner last week.
French President Nicolas Sarkozy has said he could talk about Air France's offer with Italian Prime Minister Romano Prodi when he visits Rome two days later, on December 20.
Regarding job cuts, a sensitive issue on which Alitalia's powerful unions have threatened to strike, Spinetta was reported as saying his plan coincided with Alitalia's own restructuring strategy and that cuts would number between 1,000 and 1,700 jobs.
He said Air France-KLM would buy back Alitalia's maturing bonds and renew its fleet, with two or three new aircraft each year. He also confirmed that Alitalia's twin hubs strategy would be ditched to focus on Rome at the expense of Milan.
Alitalia's Chairman Maurizio Prato has spoken favourably of the French bid, but that view faces domestic pressure to keep the flagship carrier Italian.
In a separate interview with Il Sole 24 Ore, Deputy Prime Minister Francesco Rutelli said Rome -- which has been hawking its stake for a year and saw its auction for Alitalia collapse in July -- was taking its time because both Air One's and Air France's plans "are not convincing."
Air One's all-Italian offer, backed by the country's biggest retail bank, is less advantageous financially while Air France's leaves in doubt the future of Alitalia, he said.
"We have to know if our children will go to China from Rome or Milan or via Paris," Rutelli said.
In a statement late on Saturday, Air One said it would make Alitalia Europe's fourth-largest carrier and that it had firm orders for 90 new Airbus A320s that would allow it to replace 77 old MD82s used by Alitalia on Italian and European routes.
(Reporting by Silvia Aloisi and Mathias Wildt, Editing by Erica Billingham)