Alitalia says can avoid job cuts as part of restructuring

Wed Jan 22, 2014 1:19pm EST

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By Agnieszka Flak

MILAN, Jan 22 (Reuters) - Italian airline Alitalia vowed on Wednesday to avoid permanent job cuts as part of a restructuring presented to labour unions last month, designed to whip the company into financial shape and improve its appeal to possible partners.

Alitalia raised 300 million euros ($407 million) in an emergency share issue last month and got 200 million in bank financing, which analysts said would keep it flying for the next six months, but it may again run out of cash if it fails to attract a cash-rich partner soon.

The carrier, which employs 14,000 people, said it would use state-sponsored social security schemes under which workers are temporarily sent home while a company awaits an improvement in market conditions. Staff could also be put on "solidarity contracts", under which they are paid less and work less.

It said such measures would mean no-one would be fired, but the company would still achieve its target of reducing labour costs.

"The target is still to save 128 million euros in labour costs, which would be equivalent to 1,900 job cuts," an Alitalia spokeswoman said.

"But instead of firing 1,900 people, we will make use of social security schemes ... How those will be applied and what schemes will be used are still subject to discussions with unions."

POSSIBLE INVESTMENT

The cuts are part of a cost-savings goal of around 300 million euros which Alitalia included in a plan presented to unions last month as it seeks to get into better shape to have more negotiating clout in talks with potential new partners.

The carrier is in talks on a possible investment with Abu Dhabi-based Etihad Airways, which sources close to the matter say is willing to take a stake of up to 40 percent.

"If Alitalia wants a deal with Etihad, it needs to clean up its act first," said Andrea Giuricin, CEO of TRA Consulting. "However, this doesn't yet solve Alitalia's problems, because a strategy to revamp the carrier is still missing."

Alitalia CEO Gabriele Del Torchio said last week the group may be forced to launch another share issue if it does not reach the goals outlined in the new business plan.

At the start of a meeting with unions on Wednesday, Del Torchio said the industrial plan was Alitalia's last chance, according to news agency ANSA.

Unions said the plan alone was not enough.

"This survival plan ... will only make sense if it is tied to the arrival of an industrial partner that will guarantee a productive future for the company," Mauro Rossi, national secretary of the Filt Cgil union, said after a meeting with the carrier.

Etihad said last week it would not be rushed into making a decision over an investment, although Alitalia's Del Torchio said he was optimistic about how the talks were proceeding. ($1 = 0.7383 euros) (Editing by David Holmes)

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