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Alitalia said Friday it has filed for bankruptcy protection, taking the first step in a plan to restructure and downsize Italy's failing national carrier.

Alitalia said in a statement that its board had asked the government to appoint an administrator and had declared insolvency to a Rome court.

The airline has been losing almost $3 million a day -- hurt by labor unrest, competition from budget airlines and high fuel prices. Its shares have been suspended from trading since June.

The government has been trying to sell its 49.9% stake in the airline following a failed bid by Air France-KLM earlier this year.

It has been involved in negotiations to save the carrier, but the plan reportedly envisages a breakup of Alitalia.

The profitable assets would reportedly be taken over by a group of Italian investors ready to inject about $1.5 billion into the airline. The remaining assets would then be spun-off into a separate company for liquidation.

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