An Italian investor group planning to buy Alitalia has walked away from key talks with unions, creating a standoff ahead of a Friday deadline for it to bid for the bankrupt carrier's assets, local media reported on Thursday.

The overnight talks collapsed after investors in the CAI consortium refused to grant concessions to unions on contract terms, according to ANSA and AGI news agencies, citing unnamed sources.

It was not immediately clear whether the talks were broken off entirely or just suspended, but ANSA said CAI told unions its contract offer was non-negotiable.

The group, which was formed after Italian Prime Minister Silvio Berlusconi urged Italian businessmen to save Alitalia from liquidation, plans to buy the carrier's profitable assets and merge them with those of smaller rival Air One to relaunch the airline.

CAI on Tuesday agreed to make a binding offer for Alitalia's best assets but conditioned its bid on clinching a union agreement.

It also said any bid will also be considered "suspended" until the European Union declares Alitalia's bailout did not violate EU rules on state aid and antitrust measures.

The Commission has in the past said a EUR300 million euro loan the Italian government granted to the airline in May might have broken EU rules that ban states from bailing out their airlines.

If its probe into the matter finds Italy at fault, Alitalia would be forced to pay the money back -- a liability CAI wants to ensure it does not have to take on. The Commission has said it is likely to conclude its probe in November.

Alitalia's bankruptcy commissioner has said the airline may be forced to seek a new loan to keep going if the deal with CAI is not wrapped up by mid-November, since its cash reserves are expected to last only until the start of December.