Alitalia wants to cut 5000 jobs

Alitalia SpA plans to cut 5,000 jobs, split Italy's largest carrier into two companies and let seasonal employees' contracts expire, Roberto Panella, secretary general of the UGL transport union, said in an interview.

Alitalia's head of personnel, Massimo Chieli, told unions the carrier plans to let as many as 1,100 seasonal contracts expire in addition to reducing the regular workforce by more than a quarter, union officials who attended the meeting said in phone interviews, reports Bloomberg.

The approval of the recovery plan is crucial to the company's survival as it would allow Alitalia to access a $488 million loan approved by the Italian government and the European Union.

Without the loan, Alitalia says it has enough liquidity to pay salaries only until the end of this month.

Union leaders said they would meet Tuesday to discuss the plan, and called for further negotiations with the company. But early reaction to the proposed plan was negative.

"I hope there's some room for negotiations. Otherwise reaching an accord will be very difficult," Fabrizio Solari of the transport unit of Italy's largest union, CGIL, told the Apcom news agency, informs Forbes.

According to financial analysts interviewed by AFX News, AFP's financial news service, Alitalia is likely to go out of business by spring 2005 unless it can put together a major restructuring package combining a capital hike in the region of 1.0-2.0 billion euros with wide-ranging cost and staff cuts.

Alitalia has already said it plans to transfer 250 pilots and 500 flight attendants from Rome to Milan, where it does most of its business. Some 11,000 Rome-based staff currently commute to Milan, at a high cost for the airline.

The rescue plan also includes a further round of privatization, reducing the government's stake in Alitalia from 62.4 percent to below 50 percent over 12 months.

Like its rivals, Alitalia is suffering from high oil prices that are in part responsible for a predicted loss this year on a par with the loss of nearly 520 million euros it suffered in 2003, says Channel News Asia.

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