Italy's labour minister said the liquidation of Alitalia was a "very real risk" later in the day when an investor group offering to revive the dying airline was due to make its final decision.
"I really think the future of Alitalia is hanging by a thread," Maurizio Sacconi said on a morning talk show.
With Alitalia in special administration and running out of cash to buy fuel, the risk that the airline that was once the flyer of popes and divas had only days or even hours of life left seemed more palpable than ever.
"There is no room for negotiations left ... liquidation is a very real risk," a pessimistic-sounding Mr Sacconi said.
CAI, the group of Italian businessmen headed by Chairman Roberto Colaninno, has threatened to withdraw if its proposal does not get union approval.
Unions, which began a final round of meetings among themselves at noon have been told they have until 3.50 p.m. today to give their final position. The CAI board meeting starts at 4 p.m.
Only three of Alitalia's notoriously restless nine unions have said they are ready to accept CAI's offer, which Mr Colaninno has said is final and non-negotiable.
Much will be riding on the decision of the biggest union, CGIL, which so far has voiced deep reservations about the plan, which involves job cuts, lower pay and reduced benefits.
Some 3,250 of Alitalia's 20,000 workers would be laid off under the bailout plan, which would see CAI buy only the profitable parts of the airline before relaunching it as a slimmed-down regional carrier.
Alitalia, a national symbol for more than six decades, has been the victim of political interference, labour disputes, mismanagement and, more recently, soaring fuel costs.
Asked if the government had a contingency plan to deal with the domestic transport chaos that a collapse of Alitalia would entail, Mr Sacconi said no.
"This is a very traumatic situation that we said we have feared many times," he said.
Public opinion was divided on what Alitalia's fate meant for the country.
"The company has to be saved otherwise it will bring the country to its knees and 20,000 families will be in total crisis," said Rome resident Franco Tulli.
But others believed the Alitalia saga was an Italian soap opera that should have drawn the curtain long ago.
"God Italy is disgusting, the whole world is laughing at us," said Giorgio Paoli, another Rome resident.
The carrier, which had 1.17 billion euros in debt at the end of July, is losing more than 2 million euros a day. It filed for bankruptcy protection at the end of August.
After two attempts to sell the state's 49.9 percent stake failed, the new government of Prime Minister Silvio Berlusconi persuaded a group of investors to present a rescue plan.
An Alitalia collapse would be a huge political blow for Berlusconi, a business mogul who promised in April's election to use his business contacts to find an Italian buyer.
Mr Berlusconi has offered special payouts to the workers who would lose their jobs under the rescue plan, but warned that offer would be withdrawn if the airline collapsed.
Underscoring the problems in the sector, neighbouring Greece said yesterday it would shut down its ailing state carrier Olympic Airlines and relaunch it under a new structure.