Alitalia’s future in doubt after workers reject rescue plan

The government had warned that there was no alternative to the plan which called for 1,700 job losses and an eight-percent salary cut. The company's coffers are empty.

But unions said more than two-thirds of voting employees threw out the proposal, which had earlier this month been approved by both management and unions, after almost 90 percent of the airline's 12,500 employees participated in Monday's ballot.

Italian government ministers expressed “surprise and regret” at the outcome in a joint statement, saying it put the company's recapitalisation efforts at risk.

Capital increase shelved

“At this stage, as we await the decisions of Alitalia's current shareholders, the government's aim is to keep the cost to Italian citizens and passengers to a minimum”, they said.

Meanwhile, Alitalia's board of directors met on Tuesday, a public holiday in Italy, “to evaluate the negative outcome of the referendum”.

After the meeting, the directors said they were now faced with the “impossibility” of proceeding with plans for a 2-billion-euro capital increase, including 900 million of fresh money, to keep the company afloat.

The board decided “to initiate proceedings provided for by the law”, without giving details, and convened a shareholder meeting for this Thursday.

Unions had earlier called on shareholders and the government “to avoid any traumatising and irreversible decisions”.

But Italian press reports said the airline's directors may quickly ask the state to call in special administrators to prepare a possible takeover or liquidation.

The company is de facto controlled by Etihad Airways, which acquired a 49-percent stake when it saved Alitalia from bankruptcy in 2014.

The Emirati airline entered the partnership declaring its intention to transform Alitalia into a leaner operation with industry-leading service standards – both goals that it has failed to deliver upon, according to industry analysts.

Lufthansa to the rescue?

The pressure to find a solution has been intense, with Alitalia's cash expected to run out this month, leaving its fleet grounded, unless the carrier finds emergency funding.

Etihad and Italian banks Intesa Sanpaolo and UniCredit have said they would only inject new funds if the unions agree to the new collective labour agreement and cuts.

Italian daily La Stampa said on Tuesday that Etihad may try to sell its Alitalia stake to German flagship carrier Lufthansa, but cited no sources.

The Italian government, which acted as a mediator in negotiations, warned on April 18th that a “no” victory would not only be costly but potentially fatal for the company.

Alitalia has been hit hard by competition from low-cost companies and has been accumulating losses for years.

The company had previously targeted a return to the black in 2017 but its losses amounted to 460 million euros last year and are forecast to be on a similar scale this year.

Achieving profitability by 2019 would mean six new long-haul aircraft joining its fleet between 2019 and 2021. The airline is planning to launch ten new long-haul routes between 2017 and 2021 and to recruit up to 500 new crew members by 2019, it said.

READ ALSO: Italian lawyer sues airline after nine-hour flight next to fat man