The government yesterday said it was in final negotiations to sell Air Malta's shares in Azzurra Air SpA, the financially troubled subsidiary of the national airline.

Talks have been going on for the past few months with the 7 Group plc, a company whose ordinary shares are traded in the alternative investment market of the London Stock Exchange.

Air Malta owns just over 49 per cent of the shares in Azzurra Air. The rest, 50.68 per cent, are owned by Air International Services Srl.

7 Group plc has agreed to buy 99.86 per cent of the shares from the two companies. The deal to acquire Air International's shares has already been concluded.

The Ministry for Government Investments said the transfer of Air Malta's shares would take place when and if the national carrier gets the green light from its bankers. "This is expected to take place very soon."

Azzurra Air has consistently sustained financial losses and has become a serious burden on Air Malta. Last year the subsidiary lost Lm9 million from its scheduled flight operations.

The government explained that since Malta will be joining the EU and the national airline will be allowed to operate in an open European market, the strategic value of Azzurra Air for the national airline will be significantly diminished.

The airline, which now employs 400 people, was set up by a group of Italian investors and Air Malta in 1995 and started operations a year later. It has a fleet of 13 aircraft, including seven AVRO regional jets used for scheduled flights. Azzurra Air is among only 11 airlines worldwide that still operate the RJ family of regional airliners.

It also uses Boeing and Airbus planes which concentrate on the charter market and the tourist sector. Most of the company's routes have code sharing with Alitalia and VLM.

Azzurra Air carries about one million passengers a year and, according to a recent edition of the Airline Business periodical, it was rated the 194th airline among the best 200 airlines worldwide.

This is not the first time there have been reports about the possible sale of Azzurra Air. Last year an Australian venture capital company was reportedly showing active interest in acquiring the airline.