UPDATE 4-Italy hopes for new Air France-Alitalia tie-up

(Adds Fondiaria confirming to invest, paragraph 12)

By Paolo Biondi

RIMINI, Italy, Aug 27 (Reuters) - Italy's government said on Wednesday it would welcome Air France-KLM buying into a reshaped Alitalia (AZPIa.MI), hoping to woo back the French carrier after helping scupper a previous deal between the two airlines.

Italy has managed to find 16 domestic investors to invest in a restructured Alitalia to keep it in the air for now but needs to attract a foreign partner like Air France-KLM (AIRF.PA) or Lufthansa (LHAG.DE) for the longer-term.

Alitalia, which has not posted a profit since 1999 and whose shares have been suspended since June, has been on the auction block for 20 months. Italy's two previous attempts to sell it failed.

"If Air France-KLM would like to collaborate with the 'new' Alitalia, we would be pleased," Infrastructure Minister Altero Matteoli said at a conference in the seaside resort of Rimini, adding an alliance with Lufthansa or another foreign airline would also be welcome.

Alitalia adviser Intesa Sanpaolo (ISP.MI) was expected to meet Air France-KLM representatives on Wednesday to outline the latest plan to rescue Alitalia, a source familiar with the matter said, in what could be the start of a formal approach.

Air France-KLM abandoned a takeover of Alitalia this year over union opposition and criticism from Prime Minister Silvio Berlusconi, who was then opposition leader, campaigning for April's election. Air France later said it no longer had any plans to buy Alitalia and on Wednesday it declined to comment.

EU THUMBS UP

The government has already won a vote of confidence from EU Transport Commissioner Antonio Tajani -- a former Berlusconi aide -- over its plans to salvage Alitalia, which had run the risk of irking the EU if it continued offering state support to the carrier.

"The (European) Commission has no option but to view the rescue of Alitalia through private investors in a positive manner," said Tajani. He said it would also boost competition in Europe.

The rescue plan is expected to call for a break-up of the airline into two and Matteoli confirmed that would be followed by the bankruptcy of its troubled units.

Italy must modify the law to accommodate the move and Tajani said the EU was sent a copy of the plans to do so. Small investors in Alitalia will be protected under the plan, Economy Minister Giulio Tremonti said.

Sixteen investors plan to pump as much as 1 billion euros into the healthy parts of Alitalia, another source has said, which will then emerge as the "new" airline back in the hunt for a foreign alliance.

One of the investors, toll-road operator Atlantia (ATL.MI), will plough 100-150 million euros into the new Alitalia, Chief Executive Giovanni Castellucci said. Another company on the list, insurer Fondiaria-SAI (FOSA.MI), said it would invest some 30-50 million euros.

Roberto Colaninno, who is expected to become chairman of a new company that groups the new Alitalia investors together, will also present the rescue plan at a Thursday board meeting of his IMMSI holding company.