Italy’s national airline Alitalia has been plunged into crisis after staff refused to back a rescue plan proposed by shareholders and banks.
The 11,400-strong workforce had to agree to a new package of cuts, including some 980 redundancies and an 8% pay cut for flight deck and cabin crew members, for a €2 billion ($2.2 billion) recapitalization package to go ahead.
However, staff in the perennially loss-making airline voted 67% against the proposal.
Alitalia now faces the possibility of being placed in “extraordinary administration”—a similar procedure to the US Chapter 11 bankruptcy process whereby a company is granted protection from creditors to give it time to reorganize financially. This would involve the Ministry for Economic Development appointing an administrator to thrash out a restructuring plan within 180 days.
Alternatively, the 70-year-old company could face liquidation, if the administrator’s plans are rejected by the government.
Shareholders, notably Abu Dhabi-based Etihad Airways, which took a 49% stake in Alitalia in 2014, expressed dismay at events. Shareholders will meet April 27 to discuss available options.
Alitalia spokesmen were not available April 25 to comment on the situation. Italian media reports suggested the airline’s workers were banking on the Italian government finding some way to bail out the flag carrier again.
In a brief statement, Alitalia said its board “took note with regret of the decision of the workforce to not approve the pre-agreement signed on April 14 between the company and the unions. The approval of the agreement would have unlocked €2 billion of recapitalization, including more than €900 million of new finance,” the company said. “Given the impossibility to proceed with the recapitalization, the board has decided to start preparing the procedures provided by the law and has convened a shareholders’ meeting on April 27 to deliberate on their implementation.”
In a strongly worded statement, Etihad Aviation Group’s president and CEO James Hogan said the workers’ decision put Alitalia at risk.
“We deeply regret the Alitalia staff vote outcome, which means that all parties will lose: Alitalia’s employees, its customers and its shareholders, and ultimately also Italy, for which Alitalia is an ambassador all over the world,” Hogan said. “Alitalia’s shareholders, including Etihad Airways, have provided vast amounts of financial and commercial support during the past three years. Jointly with the Italian shareholders, Etihad had reaffirmed its strong commitment and principal willingness to support the airline with a package worth nearly €2 billion in aggregate to help fund Alitalia’s new five-year business plan.”
Hogan continued, “A key condition to this commitment was that an agreed and concerted effort would be made by all interested parties, including the unions. The preliminary agreement with unions that was made possible and supported by the union leaders, Alitalia management, the Italian prime minister and three government ministers would have helped secure Alitalia’s future. The rejection of this agreement in the staff ballot is deeply disappointing.”