Alitalia Union Leaders Slam Job Cut Plans
Business/Finance News
09/07/2004 07:37:11 EST Alessandra Tarantino/AP Photo
Union Leaders Slam Alitalia Job Cut Plan
By VICTOR L. SIMPSON
Associated Press Writer
ROME - Union leaders slammed Alitalia's plans to cut 5,000 jobs as part of restructuring efforts aimed at averting collapse, but said Tuesday they will keep negotiating and urged the government to step in.
The state-run airline's plan to shed almost a quarter of its 22,000-strong labor force has angered its workers, who blame Alitalia management for the state of the airline's finances. Alitalia says it has only enough liquidity to pay salaries until the end of this month.
"By now, the workers are ready to even carry out crazy gestures, such as occupying the runways," Isla Cavallaro, head of a maintenance workers union, told the ANSA news agency.
But Italy's top union leader, Guglielmo Epifani of the CGIL, said that while Alitalia's plan "is no good" the unions will stay at the negotiating table in a bid to win concessions. He said "exaggerated forms of struggle" were not "useful" and said the government must step in and resolve the differences.
The government has made no move to do so, but ANSA quoted a government official as saying they were considering special unemployment benefits for the laid-off workers.
The airline said the layoffs would allow it to save some euro315 million (US$380 million) by 2006.
Alitalia unveiled its recovery plan during a meeting with unions Monday evening at the company's Rome headquarters. The airline was hoping to persuade reluctant labor confederations to go along with the plan.
The approval of the recovery plan is crucial to the company's survival as it would allow Alitalia to access a euro400 million (US$488 million) loan approved by the Italian government and the European Union.
Unions have opposed proposed job cuts over the past year by organizing massive strikes, including some in late April and May that grounded about 1,500 flights. However, Italian and EU officials in the past weeks have stepped up the pressure on labor confederations.
Premier Silvio Berlusconi's government has repeatedly threatened to let the airline collapse unless unions accept the cuts. In Brussels, EU Transport Commissioner Loyola de Palacio said last week that the layoffs are inevitable.
According to a company statement, about 1,570 workers would be laid off from Alitalia's flight operations, including 1,050 flight attendants and 450 pilots. Another 3,430 layoffs would come from the non-flight unit, with the majority coming from the maintenance department.
According to the statement, the plan foresees two separate companies: one for flight operations, called AZ-Fly, and another one for the ground services, called AZ-Service.
Alitalia gave no additional details on the spin-off. According to analysts, AZ-Fly will be privatized, while state-owned company Fintecna might buy into AZ-Service, which gathers less appealing ground operations.
The plan was devised by Chairman and Chief Executive Giancarlo Cimoli, who became the head of the company in May after having turned around Italy's state-run railway.
Cimoli, who did not take part in Monday's talks, has set a Sept. 15 deadline for the plan's approval.
Alitalia, which is 62 percent owned by the state, is facing one of its worst times ever.
Still reeling from the massive crisis that hit the airline industry after the Sept. 11, 2001 attacks, Alitalia has been struggling amid cutthroat competition from discount carriers and consolidation among established players.
The company has posted an annual profits only four times in the last 16 years. Last year it reported a net loss of euro517 million. Its debt stood at euro1.6 billion (US$2 billion) at the end of June, up euro220 million (US$265 million) since the end of 2003.
Revenues were below expectations in July and August, Cimoli said recently, adding that all of Alitalia's performance indicators had been negative in the first five months of the year.
The government has said it will relinquish control of the airline by reducing its stake to less than 50 percent. In June, it said the privatization would occur between six months and a year.
The government won EU approval of the rescue loan in July. The loan was the Italian government's only remaining way to aid Alitalia without breaching EU rules on state aid.