The Ferrovie dello Statto (FS) rail group, which is handling the deal, had yesterday been expecting a formal commitment from the Air France-KLM board, which has been considering a part in the deal alongside Delta airlines.
But no commitment came from Paris, FS said.
Il Sole 24 Ore reported that there were political reasons behind Air France’s sudden U-turn on the planned deal, amid an escalating diplomatic row between France and Italy.
The apparent change of heart comes following the French ambassador to Rome's recall to Paris this week amid growing tension between the two governments.
(L-R) Italy's Interior Minister and deputy PM Matteo Salvini, French President Emmanuel Macron, and Italian co-deputy PM Luigi Di Maio. Photo: AFP
“If true, this makes Alitalia's situation much more difficult to resolve,” said political scientist Dr Daniele Albertazzi, commenting on the news on Twitter.
With the European Parliament vote looming in May, Eurosceptic Italian deputy prime ministers Matteo Salvini and Luigi Di Maio have mounted a series of increasingly personal attacks on Macron in recent months, with Salvini denouncing him as a “terrible president”.
The news came as Di Maio defended his recent meeting with French 'yellow vest' protesters, which has sparked the biggest crisis between France and Italy since the end of World War II.
But Di Maio was quick to reject claims that the Alitalia deal was off.
“I've been following the Alitalia dossier for several months, and Air France's enthusiasm has not cooled now,” Di Maio told reporters in Abruzzo today.
American airline Delta was reportedly ready to acquire 40 percent of Alitalia together with the French-Dutch carrier.
The share would be divided equally, with 20 percent going to Delta and 20 percent to Air France-KLM. 51 percent of the company would be owned by FS and other public bodies.
The airline, founded in 1947, has been suffering a steady decline over the last two decades. In 2008, then-PM Silvio Berlusconi staved off an attempt by Air France to buy the airline.
In 2017 the company went into administration, with several rescue plans having failed since then.