Jobs cuts necessary for investment, says Del Torchio
(ANSA)
- Rome, June 9 - Italian carrier Alitalia is in for some "painful
and arduous" restructuring but should see a deal with Etihad
Airways in a matter of weeks, the airline's chief executive officer
said Monday.
Gabriele
Del Torchio said that changes were necessary to attract essential
investment from Abu Dhabi-based Etihad, which he said is prepared to
invest 560 million euros in the cash-strapped Alitalia. Del Torchio
acknowledged that 2,200 Alitalia employees from a staff of about
14,000 will be laid off as part of the changes demanded by Etihad
before it finalizes its investment, likely by July. "There is an
absolute need for Alitalia...to go through a complex, painful and
arduous process of restructuring," he said.
The
job cuts are non-negotiable for Etihad, he added. Last week, Italian
Labor Minister Giuliano Poletti said that the deal could require the
Italian carrier to cut as many as 2,500 jobs and restructure as much
as 800 million euros in debt. Poletti will meet on Tuesday with
unions to talk about job losses related to the deal, Transport
Minister Maurizio Lupi said. Del Torchio said that a tentative pact
could be ready to go before the Alitalia board by the end of this
week. The negotiations, which have been going on for six months,
would see Etihad take a share as large as 49% in Alitalia.
That
had triggered concerns with the European Commission, which warned
Italian authorities to ensure the United Arab Emirates carrier does
not gain a majority holding. EC rules require that majority ownership
of European airlines remains in European hands, and last week the
Italian government reassured the EC that those rules were being
obeyed. Speaking at an aviation conference, Del Torchio said the deal
would keep a majority of ownership "in Italy, or rather Europe,
since Air France is a partner". "We're not selling the
airline to these potential partners in Abu Dhabi, but we want to ally
with them," he added. To survive, said Del Torchio, Alitalia
must also become more operationally efficient and strengthen its
"intercontinental presence" as a carrier known for serving
more than Italian and European markets.
Unions
have been generally supportive of the investment by Etihad, which
will keep the Italian carrier a viable employer, and had said little
about the job cuts when these were still rumours. The tie-up would
allow Etihad to expand its roots in the lucrative European market
while giving new life to Alitalia, which was subject to a
government-led bailout last fall - only the latest in a series of
restructuring attempts by the carrier as it struggles to remain
competitive. Last October, the Italian government engineered a
500-million-euro Alitalia restructuring plan that included a
300-million-euro capital increase and 200 million euros in new lines
of credit.
However,
major investor Air France-KLM at the time rejected the restructuring
plan, saying it did not go far enough to reduce Alitalia's debt -
which is also a sticking point for Etihad. According to recent media
reports, Etihad has been negotiating with banks that are the major
creditors in Alitalia, including Intesa Sanpaolo and UniCredit, in an
effort to see the banks write down a sizeable amount of the Italian
airline's debt. Those talks are at an advanced stage, said Del
Torchio.
The
proposed investment also triggered protests from rival European
airlines, which were also upset about last fall's bailout plan that
saw Poste Italiane agree to underwrite the October capital increase
to the tune of 75 million euros. That triggered complaints from rival
European carriers of State aid, an accusation that the Italian
government has denied. In February, German airline giant Lufthansa
went further calling on the European Commission to halt Etihad's
proposed investment in Alitalia, alleging the use of State aid in
disguise to break competition rules.