Alitalia is reported to have been saved from bankruptcy after the airline’s shareholders agreed to raise fresh funds.

The board of the Italian flag carrier agreed to a €500 million rescue package.

Shareholders will contribute €300 million, including €75 million from the Italian postal service, and the rest will be financed by banks, the BBC reported.

The government says there will be an overhaul of the business.

Alitalia was facing bankruptcy and its main fuel supplier had threatened to cut off supplies on Saturday if the airline failed to secure new financing.

The airline has rarely made a profit in its 67-year history, and in the first half of this year it lost €294 million.

Air France-KLM remains biggest shareholder with a 25% stake.