The Italian council of ministers has approved a €600 million ($655 million) emergency bridge loan for Alitalia, which should secure operations until November.
Prime Minister Paolo Gentiloni said this intervention will also protect certain services that are fundamental to the country, the Italian daily 24ore reported May 3.
Alitalia announced it would enter extraordinary administration, the equivalent of US Chapter 11 bankruptcy, on May 2 after Alitalia labor unions derailed the carrier’s turnaround plan by rejecting a labor agreement. That deal called for around 980 redundancies from the company’s 12,500 workforce and an 8% pay cut.
The decision to enter administration was made the airline’s shareholders—a collection of Italian financial institutions plus Abu Dhabi-based Etihad Airways, which holds 49% of Alitalia’s shares—followed by a gathering of the company’s board of directors.
Etihad Aviation Group president and CEO James Hogan had issued a statement May 2 saying, “We have done all we could to support Alitalia, as a minority shareholder, but it is clear this business requires fundamental and far-reaching restructuring to survive and grow in future.”
According to 24ore, the Italian government agreed with the European Union to grant the loan in order to avoid state aid, which requires European Commission approval. Gentiloni said he is against “re-nationalizing [Alitalia],” reaffirming that “we don’t want to put the company’s burden on the Italian taxpayers.”
Meanwhile, Italy’s Ministry of Economic Development named three administrators to lead Alitalia—Luigi Gubitosi, Enrico Laghi and Stefano Paleari.
The minister said the administrators need to continue working on the business plan in order to find partners who know how to invest and work on the company’s historical weaknesses that have nothing to do with competition from low-cost carriers.