According to this mornings ATW News, a new possible buyer has emerged for AZ - a consortium of mainly Italian Banks/Financial Institutions.

Also, Alitalia's new Chairman Maurizio Prato has indicated that Air France-KLM is negotiating to increase its shareholding to 10% from 2%, according to La Stampa, as reported by the same ATW news article

The latest rumors are now speculating about a possible 29% to 39% takeover by Air France - KLM.


AFX News Limited
Air France seeking financial partners to buy 29-39 pct of Alitalia - report
08.19.07, 12:36 PM ET

MILAN (Thomson Financial) - Air France-KLM is mulling a possible offer for 29-39 pct of Alitalia SpA along with a private equity partner specialized in company restructuring, according to an unsourced article in Saturday's Finanza & Mercati.
(...)

The next watershed could be the official presentation (on the 30 Aug.) of the new business plan streamlining AZ's operations (with expected cutbacks in AZ's international / intercontinental service).

To me it still seems that the ball is in the court of the Italian government to make changes to the unrealistic conditions which were set previously. Any news on that? I cannot see how a repeat of the KL-AZ fiasco can be prevented otherwise.