The struggle to cut jobs and costs at Alitalia has claimed another management team while winning respite from labour unrest.
A series of strikes during the first quarter helped push Alitalia further into the red, with the embattled carrier posting operating losses of €190 million ($230 million), compared with €173 million in the March quarter a year ago. Management attempts to implement a cost-cutting plan to axe 1,500 jobs and outsource another 1,200 positions have been at the heart of labour resistance.
A deal thrashed out in early May between Italy's powerful transport unions and the government, which has a 62% shareholding in Alitalia, is aimed at ending the labour disruption and finally implement a new business plan.
The deal saw the departure of Alitalia's management team for the second time in as many months. This included chief executive Marco Zanichelli and chairman Guiseppe Bonomi. Zanichelli had only been in the post since early March when he replaced Francesco Mengozzi as talks between management and unions over the job and cost cuts broke down. Zanichelli is being replaced by Giancarlo Cimoli, the former chief of Italian rail group Ferrovie dello Stato, and billed as a man well versed in turning around flagging state-run operations.
The deal between unions and the government commits the airline to reducing or deferring proposed job cuts in exchange for labour peace. It is not clear when the jobs issue will now return to the table. One element that will be included in the new plan is the spinoff of support activities like ground handling into separate companies, leaving Alitalia as the core airline.
The plan also features the "swift acquisition" of extra financing through a bridging loan from the private sector and guaranteed by the Italian treasury to support Alitalia during its restructuring process. The carrier pledges that the refinancing will be carried out in accordance with European Commission regulations. The boardroom upheaval came just days after trading in the airline's shares was suspended for a period before the labour/government talks. Their value slumped after management warnings of the carrier potentially entering administration if labour did not agree to the job cuts. Meanwhile, Alitalia's cash reserves have fallen from €511 million at the end of 2003 to just €200 million.
MARK PILLING LONDON
Source: Airline Business
