[280417.EN.AIR] Alitalia to Start Bankruptcy Process as Workers Reject Bailout Terms

TROUBLED Alitalia said it had exhausted all options after workers voted against job cuts aimed at salvaging the cash-strapped Italian airline, pushing it toward bankruptcy for the second time in a decade, reports Bloomberg.

A EUR2 billion (US$2.2 billion) recapitalisation tied to the savings plan is effectively dead and Alitalia will start appropriate "legal procedures" as funds run out, the Rome-based airline said.

Alitalia chairman Luca Cordero Di Montezemolo "formally" communicated to the Italy aviation authority that the carrier decided to start the process of naming a administrator, said the authority's website.

Italy has said it won't nationalise Alitalia whatever the circumstances. Abu Dhabi-based Etihad, the carrier's main backer, said the employees' rejection means "all parties lose," and that it supports the board's move to hold a shareholders' meeting Thursday "to start preparing the procedures provided by law."

The company was last put into bankruptcy in 2008 after political and labour opposition thwarted sale plans, and has stumbled on since, with ties to Air France-KLM Group and Etihad Airways PJSC failing to end losses.

Alitalia employees voted against a rescue plan that included pay cuts and the elimination of hundreds of jobs, according to results of a ballot published Monday.

Once Alitalia declares itself insolvent, the government would appoint a special administrator to take formal charge and develop a rescue plan within 180 days, which could be extended for a further 90 days.

The plan might entail asset sales, reduced operations and consequently unlimited job cuts aimed at making the airline viable within two years. Alternatively, the person may decide that a turnaround isn't possible and order the carrier to be liquidated.

Source : HKSG.