The board of Air France-KLM on Monday approved breaking off takeover talks with Alitalia and said it was up to the struggling Italian airline and its unions to decide its future.
The Franco-Dutch airline did not say, however, whether the talks could be resumed or were definitely over. It said there had been an "interruption" in the negotiations.
"It is now up to Alitalia, its employees and unions representing staff to say how they view the future of their airline," it said in a statement.
Last week, Air France Chief Executive Jean-Cyril Spinetta failed to persuade Alitalia's unions to accept its takeover offer, which included a 10 percent staff cut.
Alitalia union representatives said they would be open to resuming talks with Air France but stressed a deal could take time to flesh out.
The decisions of Air France-KLM's board "do not represent a rupture and do not rule out the possibility that the talks could restart," a group of unions said in a statement.
Air France said it had considered its plan to be "the only one that would enable Alitalia to return to profitable growth with a rapid timeframe."
Italy's outgoing government translated the Air France-KLM comments as a sign the airline had not withdrawn definitely. It said it would call the unions to a meeting on Thursday.
The Alitalia takeover has been overshadowed by a general election in Italy on Sunday and Monday.
Opposition leader Silvio Berlusconi, whose party is leading in opinion polls, has called Air France-KLM's offer unacceptable and wants Italian companies to make a rival bid.
State-owned Alitalia is crippled with debts and loses more than 1 million euros a day, but it also serves one of Europe's most popular tourist destinations.
Air France-KLM shares closed up more than 3 percent at 19.70 euros, helped by a wider rebound of the French stock market.
Alitalia shares are due to remain suspended until Tuesday.
