The network of routes continued to expand throughout the 1960s, reaching fourth in the world for distance flown yearly. Total revenue and number of passengers carried made the airline the twelfth largest in the world and the third largest in Europe. The original British investment was returned during this decade, and the airline became completely owned by Italian interests. By 1960 Alitalia was operating jet airliners on some European routes, the Sud Caravelle, and the Douglas DC-8 on several longer distance routes. The Vickers Viscount propeller-turbine four-engined airliner was flown by Alitalia on its European network throughout the 1960s. Alitalia began adding DC-9s and the much larger DC-8 Super 62 airplanes to the fleet in 1967.

The Boeing 747 jumbo jet entered service and Alitalia became the first European airline company to fly with an "all jet" fleet in 1969. The first DC-10 arrived in 1973, joining the 747 on transatlantic flights connecting Rome with such destinations as Boston, Chicago, Los Angeles, and New York.

The airline updated its short-to-medium fleet with 727-200 airplanes, the first of which arrived in 1976. In 1978 Alitalia had its head office in the Palazzo Alitalia in Rome.

In 1982 the fleet renewal continued with the insertion of the Airbus A300, twin-engine jets with great capacity, and the new MD Super 80 for medium-haul flights, while the B747-200 Combi became part of the fleet, permitting greater flexibility in passenger and cargo transport.

In 1991 with the arrival of the MD11 it was now possible to fly nonstop for more than 12,000 km. Giorgio Armani designed new uniforms and he also collaborated in the design of the interiors of the new aircraft. The MilleMiglia Program was launched in 1992.

The A321, capable of carrying 187 passengers, was added to the medium-range fleet in 1994. The Boeing 767-300ER was introduced in the Alitalia fleet in 1994 as well. In 1997 it set up a regional subsidiary Alitalia Express and in 2001 became a member of SkyTeam, joining Air France, Delta Air Lines, Korean Air, Aeromexico and CSA Czech Airlines.

The modern and efficient twin-engine B777 replaced the glorious B 747s on the long-haul routes from 2002. In November 2003 Alitalia announced that it would cut 2,700 jobs over the next three years to prepare the airline for a merger with Air France and KLM. In April 2004 Alitalia acquired Gandalf Airlines, a bankrupt regional airline, to gain additional slots at several European airports, mainly in Milan (Linate) and Paris (Charles De Gaulle).

Alitalia lost money for years owing to problems with pilots and crew members, labour difficulties, and government and political interference with attempts to solve them. The Italian government supported Alitalia many times until the European Union set a moratorium on any support before 2011. But Alitalia did not survive this moratorium and so it Alitalia went into liquidation in 2008. The viable parts of Alitalia – Linee Aeree Italiane S.p.A. were bought by the private company Alitalia – Compagnia Aerea Italiana on 12 December 2008, which started operations on 13 January 2009.

Alitalia has reported only one year of profit (1998) since its foundation in 1946. Alitalia reported net losses of more than €3.7 billion between 1999 and 2008.

The government could in 2006 no longer offer support to the failing airline since it had been forbidden by the European Union to inject new capital. Therefore, as all other attempts to save the company had failed, the Italian government announced its willingness to lead Alitalia towards privatization by lowering its part of ownership in it. Several failed attempts to take over or merge Alitalia were made.

CAI, Compagnia Aerea Italiana, a consortium of Italian investors, presented a binding offer of €1,100 million to Alitalia's bankruptcy administrator on 30 October 2008 to acquire parts of the airline, pressing ahead despite refusal by some pilots and flight attendants' unions to sign on to the rescue plan. The Italian government and the bankruptcy administrator agreed to the CAI takeover offer on 19 November 2008. The profitable assets of Alitalia – Linee Aeree Italiane S.p.A. were transferred to CAI on 12 December 2008. CAI also bought fellow Italian airline Air One, which merged with Alitalia.

On 13 January 2009, the "new" Alitalia launched operations. The owners of Compagnia Aerea Italiana sold 25% of the company's shares to Air France-KLM. Air France-KLM also obtained an option, subject to certain conditions, to purchase additional shares after 2013. The "new" Alitalia has not claimed the old Alitalia's history as its own, as can be seen in official documents regarding the new "Alitalia Group". The new Alitalia does not own many of its operating airplanes, mostly are leased from Aircraft Purchase Fleet. Alitalia adopted a new logo in 2009. This version was updated again in 2016.

Alitalia announced that, starting from March 2010, it would use Air One as a low-fare airline with operations based at Milan Malpensa Airport, focused on short-haul leisure routes. Air One later operated from Milan-Malpensa, Venice-Marco Polo, Pisa and Catania as of January 2013.

On the 15 of July 2010 the Italian national airline received its first new Airbus A330-200 aircraft, configured in a high comfort three-class layout. It is the first Alitalia aircraft to feature the new premium economy 'Classica Plus' class and updated 'Magnifica' business class. Embraer delivered the first of 20 E-Jets to Alitalia in September 2011, the Embraer 190 forming part of an order placed by the Italian carrier in March 2011. On 20 April 2011, Alitalia's regional subsidiary, was rebranded as Alitalia CityLiner. It became the only regional airline of the Alitalia group and took up the role formerly performed by Alitalia Express. A brand new fleet of 20 Embraer 175s and 190s was delivered between September 2011 and March 2013. The Boeing 767-300 was retired after 17 years of service in 2012. The last 767 flight was from Accra via Lagos to Rome on 25 October 2012.

in 2012, Alitalia maintained and refined its intercontinental routes rather than launching a large number of new destinations. The airline continued operating flights from Rome to key North and South American cities such as New York (JFK), Boston, Miami, and São Paulo, as well as to destinations in Asia like Tokyo Narita and Osaka Kansai.

Fleet development in 2012 reflected Alitalia’s ongoing modernization program, which had begun shortly after the CAI takeover. The airline continued to operate a mixed fleet that included Airbus A320 family, alongside larger Airbus A330-200s and Boeing 777-200ERs and newer B777-300ER for long-haul operations, while retiring aging Boeing 737s and MD-80 series aircraft.

On 3 May 2013, in a sting codenamed "Operation Clean Holds", police made 49 arrests at Rome's Fiumicino airport, with another 37 in Italian airports including Bari, Bologna, Milan Linate, Naples, Palermo and Verona. All were Alitalia employees caught on camera and most were charged with aggravated theft and damage. In late 2013, facing bankruptcy, the loss of a major fuel supplier, and a possible grounding by Italy's civil aviation authority, the airline announced a €500 million rescue package. The airline went through some more restructuring but union strikes, delays and poor reputation made the airline have heavy losses. It was looking desperately for a partner as the airline was at the edge of bankruptcy. Then a life-line came.

In June 2014, the Abu Dhabi-based UAE national airline Etihad Airways announced it was taking a 49% stake in Alitalia. On 30 September 2014, Alitalia's budget subsidiary Air One ceased flight operations. On 1 January 2015, Alitalia-CAI formally passed its operations to Alitalia-SAI, a new entity owned 49% by Abu Dhabi-based Etihad Airways and 51% owned by the former Italian stakeholders of Alitalia-CAI.

Since then the airline has been growing, launching new routes and trying to make a profit where others failed. It added frequencies where demand was high or made selected destinations revisions. It has had a strong campaign to improve it's quality and image and the alliance with Etihad allowed many more destinations to be reached from both Rome, Milan and Abu Dhabi. By May 2016, a new revised stylish logo was revealed, the interiors of Alitalia’s 122 aircraft were to be refitted in just five months, and all wide-body aircraft were to be fitted with Wi-Fi and new in-flight entertainment systems by the middle of 2017. Also, the airline, planned and ordered new aircraft: the Airbus A320neo for short and medium haul routes.

On 25 April 2017, after Alitalia employees rejected job-cuts proposal aimed at reducing costs, the airline announced that it will start going through a bankruptcy process. The Italian government permitted Alitalia to file for bankruptcy on 2 May 2017. On 17 May 2017, after the government had ruled out nationalizing the airline, it was officially put up for sale (again) to be auctioned off.