MILAN (AFP) - Alitalia airline won a thumbs up from the stock market following a weekend job-cutting deal with flight attendants seen as clearing away a threat of bankruptcy and opening up new horizons.
In all, the state-controlled airline, which nearly collapsed earlier this year, has agreed 3,689 job cuts with pilots, ground staff and air crew.
Although this is 26 percent fewer than a total of 5,000 deemed necessary by management, the agreements are thought to be enough to keep the company on course for targets in a 2005-2008 strategic recovery plan.
Otherwise, the company, had warned, bankruptcy loomed at the end of September.
The Alitalia board was to meet on Monday to approve the four-year plan in the light of the labour agreements reached last week and during the weekend.
Endorsement of the programme will enable the company to draw on a 400-million-euro (486.1-million-dollar) government-backed rescue loan.
The price of shares in Alitalia was showing a gain of 5.42 percent to 0.30 euros, after opening with a gain of 4.9 percent. The Mib30 index rose 0.03 percent to 21,085 points.
Two other key isues remain: approval by EU competition authorities and, in the longer term, an eventual alliance with Air France-KLM.
On Sunday the European Commission sent encouraging signals in the direction of the Italian government, saying that agreements with staff were an important step in the vital process of restructuring Alitalia so that it remained viable.
A basic principle of EU competition law is that governments may help struggling companies, under strict conditions, provided that any aid approved is to restructure on a viable basis and is not used to keep an inefficient and unviable entity going at the expense of rivals.
Alitalia has long been interested in tying up alliances, and on July 23 company chairman Giancarlo Cimoli said that an alliance with the merged Air France-KLM group was highly likely eventually because "we shall have to pay a penalty if we do not ally ourselves with them".
In September 2003 Alitalia, which already had a commerical partnership with Air France, signed agreements to begin negotiations with the Air France-KLM group once the Italian government had shed its controlling interest. In any case, Air France has made clear in recent months that Alitalia must first put itself on a viable financial footing.
On Saturday, Alitalia reached an agreement with flight attendant unions to cut 900 jobs, increase flight hours and freeze wages, generating at least 80 million euros in annual savings.
Initially, the company had sought 1,050 job cuts among cabin crew.
Last week, the airline agreed with ground personnel unions to cut 2,500 jobs and freeze wages, which will generate about 150 million euros in savings.
Alitalia pilots also agreed to 289 redundancies and to longer working hours to allow 52 million euros in savings in 2006.
The airline had sought 450 redundancies among pilots and 3,500 among ground personnel.
Despite obtaining 3,689 job cuts, rather than the 5,000 planned, Alitalia is still expected to come close to achieving the targets set in its 2005-2008 business plan, the Italian daily La Stampa said on Sunday.
Extra revenues and savings stemming from the group's reorganization are expected to reach 850 million euros in 2005-2008 compared with an expected 878 million initially, the newspaper said.
According to Monday's Il Corriere della Sera, the government will agree on Friday to include airlines in a special long-term unemployment fund to finance the job cuts.
Once the airline secures the bridging loan, the company plans to launch a recapitalization in early 2005 of between one and two billion euros.
Under the restructuring plan, the group would be split into two: Alitalia Fly for flight services and Alitalia Service for ground services.