Alitalia rescued after financing deal agreed

The Italian postal service has contributed to Alitalia's rescue

Alitalia has avoided bankruptcy after the airline's shareholders agreed to raise fresh funds.

The board of Alitalia agreed to a 500m euros (£425m; $678m) rescue package.

Shareholders will contribute 300m euros, including 75m euros from the Italian postal service, and the rest will be financed by banks.

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.

Alitalia has rarely made a profit in its 67-year history, and in the first half of this year it lost 294m euros.

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

Air France KLM remains the airline's biggest shareholder with a 25% stake.