Alitalia risks collapse after staff spurn restructuring plan

Going down: Passengers boarding an Alitalia-Etihad plane on the tarma at Brindisi airport in southern Italy. Alitalia workers have rejected a restructuring deal from the company’s management and unions to save the ailing carrier. – AFP

ROME: Alitalia SpA workers voted against job reductions and pay cuts touted as the last chance for the cash-strapped Italian flag-carrier to avoid being placed under administration.

Staff at the airline, which employs 12,500 people, rejected the steps brokered by management and labour leaders as part of a 2 billion-euro (US$2.2bil) refinancing package, according to the results of a ballot released by Uiltrasporti. About 70% of voters opposed the deal, the USB union said.

Among other measures, the plan included 1,600 job losses, down from the 2,000 proposed earlier.

Economic Development Minister Carlo Calenda said earlier that with Alitalia running out of funds a “no” vote would likely prompt the Italian government to act as a special administrator for the company before it is liquidated in six months. Transport Minister Graziano Delrio also told TG1 television that there is no chance of the carrier being nationalised.

Italian ministers said in a joint statement yesterday that the outcome of the ballot is “regrettable” and puts the restructuring plan for Alitalia at risk. The government will seek to “minimise the cost to citizens and travellers” as it awaits the next move from the company’s shareholders, they said.

Those investors include Abu Dhabi-based Etihad Airways PJSC, which bought a 49% stake in Alitalia in 2014, but which hasn’t been able to effect a turnaround. The Rome-based company had a net loss of 199 million euros in 2015, the last year for which it has published figures.

Alitalia’s board was scheduled to meet later yesterday “to evaluate the negative outcome” of the vote, according to a statement posted late Monday after the result became known. The carrier could seek bankruptcy protection, Il Corriere della Sera reported. The government would then name a commissioner to seek a buyer for its assets, the daily said.

The recapitalisation for which the cost cuts were a precondition included about 900 million euros of new funding, according to Alitalia’s latest business plan, leaving the company facing a liquidity crunch. UniCredit SpA, Italy’s largest bank, said last week it had lost almost 500 million euros on the airline.

Etihad could now seek to sell its stake to Deutsche Lufthansa AG, La Stampa reported yesterday without citing anyone. The German airline last year agreed to take 38 aircraft from Air Berlin Plc, also part-owned by the Gulf company and which has racked up record losses in the past two years. Etihad and Lufthansa announced a cooperation pact in February after years of rivalry.

Alitalia as it exists today was created in 2008 after the original airline entered bankruptcy and its healthier assets were purchased by a group of investors and combined with another ailing Italian operator, Air One. – Bloomberg