Clearing the way for a make-or-break restructuring, unions at Italian airline Alitalia on Wednesday agreed to unemployment packages for around 3,700 employees which would be largely paid for by the state.
The deal, reached after marathon late-night talks with government ministers and Alitalia management, would finally enable the loss-making carrier to unlock a €400 million emergency loan needed to keep it flying.
"We have laid the foundation stone. Now we have to build the house," said Alitalia chief executive Giancarlo Cimoli.
"I know that we will really have to battle with our competitors, but we are in a free market and it's right to fight," he said.
Alitalia adjourned a board meeting yesterday until October 13th to allow time to review possible impacts of the deal.
Alitalia's management has been locked in negotiations with unions for weeks, grinding out a deal to shed roughly a sixth of the workforce and cut costs - vital, it says, to the survival of the state-controlled flag carrier.
Unions said their acceptance of the plan depended on securing comprehensive welfare payments. Union sources said one of Alitalia's nine unions refused to sign up to yesterday's deal, but with the eight others on board, the accord was seen as valid.
Under the agreement, the government offered those facing lay-off two years of handouts under a so-called cassa integrazione programme, under which the workers would stay at home but still legally be viewed as employees.
Thereafter, the government said it would put the workers on a so-called mobilita programme for up to three more years, officially removing them from Alitalia's books while letting them continue to draw part of their original salaries.
Mr Cimoli said the cost of the deal was around €300 million and union sources said the state would pick up almost all of the tab, with the company providing the rest.
Key questions for investors sorting through the turnaround plan over the coming weeks will be future financing for Alitalia, which plans fleet expansion in 2007 and 2008.
