Alitalia unions baulk at 5,000 job cuts

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Alitalia revealed plans to cut 5,000 staff - almost a quarter of its workforce - and split itself in two yesterday in last-ditch attempt to avoid bankruptcy.

The struggling Italian airline met unions last night in an attempt to agree a restructuring plan that would allow it to access a €400m (£271m) loan. Without the loan Alitalia says it will only be able to pay its wages bill until the end of this month.

However, the unions left the meeting warning that the job cuts were unacceptable. Roberto Panella, the secretary general of the UGL transport union, said in an interview with Bloomberg News: "This plan is not one that unions can accept and we ask that the government intervene in the talks." "I hope there's some room for negotiations otherwise reaching an accord will be very difficult," Fabrizio Solari of the transport unit of Italy's largest union CGIL told the Apcom news agency.

The nine major unions at the airline are scheduled to meet this morning to issue a response. A further meeting between the unions and Alitalia is set for this afternoon.

The airline, which is 62 per cent owned by the Italian government, has lost €2.4bn since 1989. The €400bn loan is dependent on the rescue plan being proposed by Giancarlo Cimoli, a turnaround expert who was made Alitalia's chairman and chief executive in May, being agreed by 15 September.

Under the plan, Alitalia will be split into two businesses. AZ Service will include ground services such as maintenance and luggage handling while AZ Fly will include the airline. The proposals see the airline breaking even by 2006, and gaining €1.027bn from the restructuring by 2008. It also plans to expand its fleet by seven long-haul and 12 medium haul aircraft.