The country’s national flag-carrier has been struggling since April 2017 when it declared bankruptcy.
Rome gave the green light to the funding at a cabinet meeting late Monday, after a council of ministers sat down earlier this month to begin discussions relating to the ongoing saga.
The new loan will throw a lifeline to Alitalia and allow it to restructure as the government continues to seek investors to relaunch the carrier.
So far, Alitalia has been unsuccessful in attracting a new buyer which has resulted in government intervention.
The council believes the loan amount will mean the airline will be bought in spring; the date May 31, 2020, was given as a deadline.
This will mean the airline will be operating for the summer season, provided it can finalise a deal.
With several agreements falling through and unions pressuring the government for a long-term solution, nationalisation might be the only remaining option if this loan fails to secure a buyer by the end of spring 2020.