Michael O\'Leary, head of the low-cost Irish airline Ryanair, predicted on Wednesday that ailing Italian rival Alitalia would survive if it ties up with another carrier and trims its network, while adding that he planned to expand service to southern Italian destinations. Italian news agencies quoted O\'Leary as telling a press conference in northern Bologna: \"This is a very difficult economic period for many national airlines like Alitalia, Iberia and SAS because they have very high costs while the European market is evolving towards low-cost.\" \"The only thing for Alitalia to do, as for Iberia and SAS, is to find a partner,\" he added in remarks published in Italian that referred to the Spanish and Scandinavian carriers. For Alitalia, that could mean Air France, O\'Leary noted. Rumours resurfaced this week that Air France could acquire Alitalia in a cut-rate deal, though Air France denied that it was in advanced talks to buy out Italian investors. Air France-KLM already owns 25 percent of Alitalia\'s equity, and a pact that has guided relations between the Italian airline\'s shareholders is set to expire on Saturday. Meanwhile, the Ryanair boss suggested that Alitalia\'s salvation could also come via \"a reduction in its national and international destinations, which would constitute an opportunity for us to grow further in Italy, especially in the south and in the islands. \"Alitalia will survive but it will be a much smaller company,\" O\'Leary concluded. Five years after it was rescued from bankruptcy by the Italian state and a consortium of Italian businessmen, Alitalia has continued to struggle and once again finds itself in a financial mire. According to Italian press reports, it is losing 630,000 euros ($822,000) a day, hurt by higher fuel prices and the European debt crisis, adding to the debt of 730 million euros under private ownership.