Etihad Airways is expected to finish examining Alitalia‘s books within a month as it ponders whether to invest in the loss-making Italian airline, Alitalia’s chief executive said on Wednesday.

Alitalia has cut costs and refreshed its fleet since being rescued and privatized in 2008. But the company was hit after focusing on domestic and regional markets where it has struggled to compete against low-cost airlines and fast trains on the busy Milan-Rome route.

A tie-up with Etihad could bring Alitalia the resources to invest in a new strategy focused on long-haul routes.

Talks with the Gulf carrier intensified this month and sources close to the matter said Etihad could be interested in buying a stake of up to 40 percent in the company.

“The due diligence should be concluded within three to four weeks,” Alitalia Chief Executive Gabriele Del Torchio told journalists on the sidelines of an event in Milan.

He said he was “realistic” about the process and did not expect it to be easy, or to conclude quickly.

Sources say Etihad wants a heavy restructuring of Alitalia’s debt and was also asking for job cuts at the Rome-based airline.

Del Torchio declined to comment on conditions Etihad might have put on the table, although he said he did not believe Alitalia’s staff headcount of 14,000 was a big problem.

Credible Plan?

Etihad has said it will only invest in Alitalia if it fits in its network and if Alitalia has a credible plan to return to profit. The group has met Alitalia’s creditors in recent weeks.

They include Italy’s two top lenders UniCredit and Intesa Sanpaolo, troubled Monte dei Paschi di Siena and Banca Popolare di Sondrio.

The sources have said Etihad was asking the banks to write off big parts of Alitalia’s debt. Other options were for banks to postpone repayments or convert debt to equity, they said.

The head of Intesa Sanpaolo, which is also an Alitalia shareholder, said his bank would refuse a restructuring of the airline’s debt.

“Whoever evaluates an acquisition, usually asks for debt to be restructured,” Intesa CEO Carlo Messina said at a separate event. “They will ask for (debt) restructuring, we will say no, but that’s part of negotiation.”

Disagreements over a debt restructuring already scuppered efforts by Alitalia to secure more capital from its shareholder Air France-KLM last year. Air France-KLM eventually allowed its 25 percent stake to be diluted to around 7 percent.

Del Torchio said he did not expect a change of government in Italy to affect the talks with Etihad. The former government of Enrico Letta was instrumental in engineering a 500 million euro ($687 million) emergency rescue last year to keep Alitalia flying while it searched for partners.

“We expect the new government to give us the same level of support, especially given the importance of Alitalia in the development of Italy’s tourism sector,” Del Torchio said.

He said 2014 had got off to a positive start for Alitalia and the number of passengers was increasing.

For Etihad, a stake in Alitalia would further its effort to expand its global reach through strategic holdings in other airlines. Alitalia offers access to Europe’s fourth-largest travel market and flies 25 million passengers a year.

Additional reporting by Paola Arosio, Stephen Jewkes and Gianluca Semeraro in Milan, Stanley Carvalho in Abu Dhabi and Tim Hepher in Paris; editing by Tom Pfeiffer and Keiron Henderson.

Photo Credit: Alitalia planes are pictured before takeoff at the Fiumicino airport in Rome December 10, 2013. Max Rossi / Reuters