The source said a development could emerge in the coming hours or days.

Gulf carrier Etihad is considering an investment in the troubled Alitalia as it seeks to expands its global reach and compete with regional rivals.

In February Etihad said it was in the final stages of due diligence process and would make a decision on whether to invest in Alitalia in a month, a deadline that has now passed.

Alitalia needs to find a cash-rich partner to keep its planes in the air, after being rescued with a 500 million euro ($694 million) government-engineered package last year.

The Italian carrier could not immediately be reached for comment.

($1 = 0.7204 Euros)

(Reporting by Naomi O'Leary; Editing by Anthony Barker)