Alitalia has won a stay of execution as its board declared the state-owned airline had funds to keep going "in the very short term," with its takeover by Air France-KLM on standby and a general election at the weekend.

The board had been expected to decide whether it had to put the company into special administration after Air France-KLM gave up talks with unions last week and said it was up to workers to decide the Italian flagship's future.

"As of March 31, cash and short-term financing... amounted to around EUR170 million euros," Alitalia said in a statement. It made no mention of whether special administration was discussed.

The airline loses more than EUR1 million a day and high oil prices could hurt its finances further.

Alitalia said the funds meant it had breathing space to take short-term initiatives to secure the company's survival. But it reiterated it needed "substantial financial support" in order to "confirm continuity of operations."

Alitalia also welcomed a statement Air France-KLM made on Monday, which appeared to leave open the possibility that the bid from the world's biggest airline might still be on the table -- a deal that includes EUR1 billion of fresh cash.

Without the bid, Alitalia faces a double deadline as both its funds run perilously low and its major shareholder, the Italian government, heads for an election on April 13 and 14.

Unions are set for last-ditch talks with the government on Thursday and Alitalia also welcomed this development. It postponed its own meeting with workers from Wednesday and unions said they were disappointed by that move.

Prime Minister Romano Prodi's administration approved Alitalia's takeover by Air France-KLM but is now tipped to lose the election, according to opinion polls.

That could hand the sale to media magnate Silvio Berlusconi, who has said he wants an Italian deal -- but so far no domestic contender has come forward.

"I hope the brainless talks with Air France on the future of Alitalia will end," Berlusconi told reporters. "Only then will the many business people who have told me they want to intervene come forward."

Air France-KLM did not say in its Monday statement whether its talks were definitively over. It holds most of the cards now with no alternative offer in sight and Italian unions having mellowed their tone since last week's acrimonious break-up.

The leader of the Cisl union, one of Alitalia's biggest, told La Repubblica newspaper on Tuesday that a post-election agreement with Air France-KLM would be desirable, while other unions indicated they still saw room for discussion.

The Franco-Dutch airline's bid included a 10 percent staff cut as well as an all-share offer valuing Alitalia at about EUR138 million (USD$218 million), with a further EUR1 billion of funds in a capital increase, and a deal on its bonds.

Success would give Air France-KLM a key position in one of the world's most popular tourist destinations and the lucrative business route from Rome to Milan, Italy's financial capital.

Air France-KLM said on Monday this was "the only plan able to allow Alitalia to return to health swiftly."

Alitalia has about EUR1.37 billion of debt.

Economy Minister Tommaso Padoa-Schioppa, who is driving the sale, has said unions must make a move fast or risk special administration for the airline -- under which the government would appoint someone to sort out whether it could fly on.

Alitalia's shares will start limited trading on Wednesday after a suspension since April 4 ahead of the board meeting.