The bank appointed to advise on a rescue of troubled Alitalia hopes to present proposals by the end of July after the Italian carrier’s losses for 2007 hit half-a-billion euros.

Alitalia reported an operating loss of Euro310 million for the year and put the cost of its loss of reputation alone at Euro150 million. Chairman Aristide Police said on Saturday that the airline faced its last chance of survival. Police is the fourth chairman in two years.

The airline has not made a profit since 2002 and its debts hit Euro1.36 billion in April. The carrier remains half in state hands with talks on privatisation dragging on since 2006.

Air France-KLM pulled out of a takeover in April after failing to win union support for projected job losses. However, incoming premier Silvio Berlusconi opposed the takeover, insisting Alitalia remain in Italian hands.

Italian bank Intesa Sanpaulo is studying the books as it prepares a fresh resuce plan that is likely to see the airline broken up. Smaller Italian rival Air One is expected to be allowed to take over the profitable parts of Alitalia.