ALK pays lot of tax so selling CAI at a loss will reduce ALK's...

ALK pays lot of tax so selling CAI at a loss will reduce ALK's tax bill. If there is no hope for CAI to turn it around and if ALK is not planning to make TO bid for CAI then I am not sure what is ALK hoping to achieve by still holding.

Having said this, I hope ALK are monitoring the situation more closely and have some understanding if CAI are making progress or not. Otherwise ALK should be slowly selling into any rally and they had few opportunities to reduce their stake.
Tax write-off - if ALK can claim this loss against the profits from Tomie.

For ALK to take over CAI, ALK will have to buy more tenements around CIA's operation and perhaps drill them to ensure there is high grade resource that will enhance the operation further. If they can establish there are synergies while CAI still struggles then ALK can make a move and establish new production centre in WA.

Have ALK considered that? Not sure. I did suggest something along these lines to ALK while ago and was told CAI already owns plenty of land there.