[280117.EN.AIR] Struggling Alitalia to Cut Up To 1,600 Jobs in Restructuring: Sources

EXECUTIVES from key investor Etihad Airways and Alitalia, which went bankrupt in 2008 and again was on the edge of collapsing in 2014, will meet with Italian ministers, according to a statement from the Abu Dhabi-based airline.

Talks will be centred on new restructuring measures with development and transportation ministers in Rome, according to three people familiar with the discussions. The plan could include as many as 1,600 job cuts, according to two of the people, who asked not to be identified before an official announcement, reports Bloomberg.

Less than three years after Etihad bought a 49 per cent stake as part of a plan to revive the Italian airline, Alitalia was notified in December by investors and creditors that it had 60 days to come up with a viable cost-cutting plan.

Alitalia has also authorised Etihad to pump in an additional US$231 million in funding via "semi-equity" financial instruments that lack voting rights, according to minutes of an extraordinary shareholders' meeting for the Italian carrier held on December 22.

After reaching an agreement with shareholders, which include short-term financing deals with Italy's two biggest banks, Intesa Sanpaolo SpA and UniCredit SpA, Alitalia plans talks with labour unions, suppliers, aircraft leasing companies and other partners on potential spending reductions, including a road map for job cuts, the Rome-based carrier said December 22.

After losing EUR200 million ($211 million) in 2015, Alitalia's deficit for last year could be near EUR400 million, two people said. Alitalia declined to comment.

Along with the job cuts, the new plan calls for a shift in business model away from the airline's traditional schedule of short and medium-range flights towards a setup that would allow it to better compete with low-cost carriers, according to the people.

Source : HKSG.