Alitalia looks set to recieve a euro400 million bridging loan from the Italian government after unions agreed to a restructuring plan that includes the loss of 3,700 jobs, or one sixth of the airlines workforce.
Agreement on a viable financial plan for Alitalia’s future was one of the criteria for European Commission approval of the loan earlier this year. The airline had warned it would run out of cash by the end of September if it did not receive an injection of funds.
In a one-page statement Tuesday 62% state-owned Alitalia said the rescue plan would enable it to breakeven in 2006, with savings from the job cuts expected to be worth €280m (£191m). Margins of earnings before interest tax, depreciation, amortisation and aircraft rentals (EBITDAR), meanwhile, would be ‘equal to those of most noteworthy operators in the industry’.
The announcement follows a week of discussions with unions, which ended last Saturday after cabin crew agreed to 900 layoffs, versus the 1,050 sought by management, and to fly more hours. Ground staff had earlier accepted 2,500 job cuts, while pilots agreed to work longer hours for lower pay.
However, Alitalia added that unions were opposed to a second element of the rescue plan, namely the splitting of company into two divisions - AZ Fly and AZ Service - with the former managing flight operations and the latter non-flight activities, such as maintenance and IT.
The airline’s chief executive, Giancarlo Cimoli, wants to sell off part of AZ Service to help fund AZ Fly, but unions fear that the split could result in the privatisation of the non-flight division and ultimately further jobs losses.
Alitalia management are expected to meet with Italian prime minister Silvio Berlusconi later this week, ahead of further talks between Cimoli and union leaders. Berlusconi must then submit the rescue plan to EU regulators for approval.