March 17, 2017 / 2:29 PM / 9 months ago

Alitalia to cut 2,037 jobs, reduce flight crew pay in latest revamp: unions

MILAN (Reuters) - Alitalia’s new restructuring plan envisages cutting 16 percent of its workforce and reducing flight personnel’s salaries by up to a third in a last-ditch attempt to make the troubled Italian airline profitable, labor officials said on Friday.

Italy’s flagship carrier, which has made an annual profit only a few times in its 70-year history, is in a race against time to win union support for its latest turnaround plan as it seeks to unlock financing and avoid having to ground planes.

Unions, however, called a 24-hour strike for April 5 after discussions with Alitalia management on Friday. The company’s plan includes 2,037 ground staff job cuts out of a total workforce of 12,500.

“This is not a plan to get the company back on its feet but only a cost-cutting exercise,” said Emiliano Fiorentino, national secretary of the Filt-Cisl union.

“It’s basically a survival plan and as such it is not acceptable.”

Under the plan, flight attendants could have their pay cut by 32 percent and pilots by 22-28 percent, unions said.

Labor groups also fear that job cuts could soon extend to flight personnel.

Alitalia CEO Cramer Ball said the cuts were “painful but necessary”.

Despite several overhauls and cash injections over the years, Alitalia is losing at least half a million euros a day and could run out of cash in the coming weeks unless shareholders agree to pump in more money, sources say.

Alitalia, 49 percent of which is owned by Etihad Airways, said this week that it expects to return to profit by the end of 2019 through 1 billion euros ($1.1 billion) of cost cuts over the next three years and a revamp of its business model for short and medium-haul flights.

The carrier also pledged to increase revenues by 30 percent.

The airline, in which banks Intesa Sanpaolo and UniCredit hold stakes, warned that union backing for the plan is essential to obtaining fresh funding from shareholders.

After buying into Alitalia in 2014, Etihad pledged to return it to profit by 2017 by reducing costs, turning Rome into an intercontinental hub and expanding lucrative long-haul operations.

But the turnaround has faltered in the face of competition from low-cost airlines such as Ryanair and high-speed rail services, while deadly attacks across Europe have dented demand for travel.

“The airline sector has peaked in 2016 and it won’t be easy to raise revenues in a market where margins are increasingly under pressure,” said Andrea Giuricin, a transport analyst at Milan’s Bicocca university.

Editing by David Goodman

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