MILAN (AFP) - Alitalia headed into eleventh-hour talks with unions to clinch plans to avoid bankruptcy, after winning a key deal with pilots.
The struggling state airline and all six unions representing the pilots agreed late Tuesday to a deal that includes a pay cut and a near doubling of their annual flight time.
Alitalia said the pilots`s agreement would produce annual savings of 52 million euros (63.7 million dollars).
It stressed in a statement "the importance of the signed accord, which marks a major step towards restoring and relaunching the company."
Shares in Alitalia soared as investors welcomed the deal. Alitalia was up 8.32 percent at 0.30 euros in midday trading on the Milan stock exchange, which was 0.30 percent stronger overall.
A statement by the pilots` unions said: "The agreement reached represents a real base for an agreement with general staff which the unions have the firm intention of concluding with Alitalia and with the governmet to assure a solid future for Italy`s most important airline."
Talks with other unions were scheduled for Wednesday, a deadline the carrier had set for hammering out a rescue plan that would eliminate 5,000 jobs.
Alitalia chairman Giancarlo Cimoli had called on unions to signal their backing for the plan by then, warning the carrier would be unable to pay salaries beyond the end of the month.
The deadline has not been mentioned by Alitalia directors for several days, however.
Drawn-out negotiations over the pilots` deal pushed back talks with unions representing flight attendants and ground personnel, which resumed late Tuesday.
The pilots` deal includes variable pay for overtime based on an accord worked out at the German airline Lufthansa, although pay levels are 40 percent less than for the German carrier`s pilots.
"The protocol represents an important step for the Italian air system and permits the company to pursue a restructuring plan and above all begin again to develop," the pilots` statement said.
With an agreement in place, a 400-million-euro government-guaranteed bridging loan would become available, enabling Alitalia to keep flying until next March.
The unions have maintained that the deadline should be pushed back several days, given the stakes involved and the good will shown to date by the parties.
"We have to believe there exists the possibility of reaching an agreement on Alitalia," said Luigi Angeletti, secretary general of the UIL union.
In addition to an understanding on working conditions, labor unions are seeking government guarantees on social benefits and the future of ground service operations, which would be separated from in-air activities.
Unions fear in particular that ground services, sold off to outside parties, would not be covered by the restructuring and want them to be managed by a state holding company.
The government until now has simply said it would help with the re-training of workers and their placement in other companies.
Details of Alitalia`s final restructuring plan must be provided to European Union officials to ensure the terms contain no new elements of state aid, a European Commission spokesman said Wednesday in Brussels.
In July, the EU executive approved the government-backed bridging loan, but Italian authorities were given six months to present the EU with a complete rescue plan for the carrier.