Alitalia ponders massive job cuts
By Tony Barber in Rome
Published: August 26 2004 17.59 | Last updated: August 26 2004 20.06

Alitalia is considering cuts of more than 25 per cent in its 22,000-strong workforce in a bid to save Italy's flagship carrier from collapse before mid-September, according to people close to the airline and its unions.

However, the impact on employees would be softened because many of the roughly 6,000 affected would be transferred to other companies.

These include flight maintenance and service businesses to be spun out of Alitalia as part of the recovery plan, but in which the airline would still hold stakes.

Giancarlo Cimoli, Alitalia's chief executive, has told trade unionists in negotiations this week that drastic cost-cutting measures, aimed at saving €880m over the next four years, are the only way to prevent the airline's demise.

He has strong support from Domenico Siniscalco, Italy's finance minister, and other ministers who have vowed not to approve a €400m government-guaranteed loan for Alitalia unless the unions accept the recovery plan.

“The government doesn't have the possibility of saving Alitalia with public money,” Rocco Buttiglione, Italy's European affairs minister, who is soon to join the new European Commission, said yesterday. The proposal to shift thousands of jobs from Alitalia, which is 62 per cent state-owned, is meeting opposition from some unions. They fear permanent job losses may follow, unless Alitalia retains majority stakes in businesses that hire the workers.

The deadline for the conclusion of talks between Alitalia's management and unions is September 15. In some areas they have already made progress, with pilots indicating that they are willing to accept the same working conditions as pilots at Lufthansa, the German airline, but with 20 per cent less pay.

But the heart of the problem remains the scale of the proposed job cuts and the future structure of Alitalia.

Two previous rescue plans have foundered over the past year because of union resistance and divisions inside Italy's four- party ruling coalition.

Mr Cimoli has not publicly cited a figure for potential job cuts, but has told the unions that Alitalia's bloated costs and low productivity mean that flight attendants, ground staff and other employees must accept new, stricter contracts.

Union leaders say the contract offered to flight attendants would result in more than 800 redundancies among the 4,500 staff in this part of the business.