Alitalia 's board was set to approve a rescue plan today that will slice the firm in half after unions agreed to job losses and cost cuts needed to save Italy's flag carrier airline from collapse.
Chief executive Mr Giancarlo Cimoli will hold final talks with unions before heading into the board meeting late afternoon to present his plan, which aims to bring the airline to breakeven by 2006. Alitalia stock gained over 5 per cent today after cabin crew agreed on Saturday to join pilots and ground staff and accept sacrifices to secure the firm's future. Alitalia 's convertible bond which rose 3 points to trade at 83.28 per cent of face value. Alitalia 's medium and long-term future will depend on the plan Cimoli will put to the board. Alitalia 's 20,700 staff. That number is less than the 5,000 cuts Mr Cimoli had proposed, but the cost savings through productivity gains may make up some of the difference. Alitalia reconsider its partnership with Air France, and there has been speculation that the Italian flag carrier could strike an alliance with Germany's Lufthansa.
Volatile
Traders said it was speculation from retail investors, not institutions, which was moving the stock as well as
At 9:32 a.m. shares were up 3.86 per cent at 29.9 cent after touching a high of 30.8 cent. "The stock is like a number on a roulette wheel," a Milan-based trader said.
Mr Cimoli, the airline's third CEO this year, has already achieved what his predecessors couldn't - getting workers to accept the idea of slimming down the state-controlled airline. That agreement will allow him to access a government-backed €400 million emergency loan to keep the firm in business after the end of this month when it would otherwise run out of cash.
But, under European Union rules which ban the old practice of governments bailing out airlines, that loan will have to be repaid within a year and
Unions have agreed to around 3,700 job cuts - just over a sixth of
Mr Cimoli has also hinted his plan could see
But in an interview with Corriere della Sera newspaper today, Lufthansa CEO Mr Wolfgang Mayrhuber said it was too early to say if he would be open to such a partnership, adding the two companies were very different.