Alitalia is again facing collapse after workers rejected a restructuring deal and the airline’s board decided to convene a special shareholders’ meeting Thursday to look at its future.
Workers are betting on the Italian government stepping in with an alternative plan after they rejected a restructuring deal that had been signed off by union officials but would have seen 1700 jobs cut and flight crew pay cut by 8 per cent.
The flag carrier's directors warned after a board meeting on Tuesday that they were preparing “the procedures provided by law” in response to the vote.
“The approval of the agreement would have unlocked €2 billions ($US2.2bn) of recapitalization including more than euros €900 million of new finance,’’ it said in a statement posted on Alitalia’s website.
“Given the impossibility to proceed with the recapitalisation the board has decided to start preparing the procedures provided by the law and has convened a shareholders meeting on April 27 to deliberate on their implementation.”
The Italian flag carrier is 49 per cent owned by Abu Dhabi’s Etihad, which bought into the troubled airline as part of plan to establish an international network of equity partners.
The choice of Alitalia surprised the industry given the airline’s troubled history and the fact it has rarely made a profit during its 70-year history
Alitalia is said to be losing at least €500,000 a day and sources told Reuters it was set to run out of cash in coming weeks.
The sources said the company would use Thursday’s meeting to consider whether to enter into a special administration which would see the government asked to appoint a commissioner who would assess whether the carrier should be restructured or wound up.
However, the Italian government has said it will not renationalise the airline and there appears to be little appetite the existing investors to put more cash into the carrier without the restructuring agreement.
Etihad Aviation Group chief executive James Hogan, who is also vice chairman of Alitalia, said the staff vote meant all parties would lose — employees, customers, shareholders and ultimately, Italy,
“Alitalia’s shareholders, including Etihad Airways, have provided vast amounts of financial and commercial support during the past three years.,’’ Hogan said. “Jointly with the Italian shareholders, Etihad had reaffirmed its strong commitment and principal willingness to support the airline with a package worth nearly €2 billion in aggregate to help fund Alitalia’s new five-year business plan.
“A key condition to this commitment was that an agreed and concerted effort would be made by all interested parties, including the unions.
“The preliminary agreement with unions that was made possible and supported by the union leaders, Alitalia management, the Italian Prime Minister and three government ministers would have helped secure Alitalia’s future. The rejection of this agreement in the staff ballot is deeply disappointing.’’
Hogan said Etihad supported the board’s decision today to convene the shareholders’ meeting and to start the legal proceedings.
Under the restructuring plan, Alitalia planned to cut costs by 1 billion euros ($US1.07 billion) over three years, cut its single-aisle fleet by 20 aircraft and move to a domestic low-cost model.
It would have seen the Italian carrier fit extra seats to its single-aisle planes, increase aircraft utilisation and cut short- and medium-haul air fares as it tries to boost revenues while reducing costs. It will also charge for ancillaries such as seat selection, checked luggage and food.
But it would have stayed a full-service carrier on its long-haul markets.
