Rome  - An Italian government-approved plan to save Alitalia was in disarray Friday with the collapse of talks between unions representing employees and a group of Italian investors seeking to take over the troubled state-controlled airline.

Following a week of unsuccessful talks with the unions, the grouping of investors, CAI, said in a statement Friday that "conditions to continue negotiations do not exist."

CAI blamed the unions for not "not recognizing the dramatic nature of Alitalia's situation and of the need for the profound break with the past that the rescue plan calls for."

Unions rejected CAI proposals to cut between 5,000 and 7,000 jobs at Alitalia, as well as calls for pilots and flight crews to serve longer work shifts.

Prime Minister Silvio Berlusconi, who campaigned prior to his April election triumph for Alitalia to remain in Italian hands, has championed CAI's bid as an alternative to one made by French-Dutch airline Air France-KLM.

Air France-KLM withdrew its bid, which was supported by Italy's previous centre-left government, when it became clear that Berlusconi, once in government, would have opposed it.

On Friday, Labour Minister Maurizio Sacconi, who had led the round of talks, described the situation as "worrisome," although he expressed hope that it could still change.

It is estimated that Alitalia loses around 2 million euros (2.7 million dollars) a day. (dpa)