MILAN (AFP) - Alitalia directors were expected later to give formal backing to a four-year rescue plan that will free up a 400-million euro (486-million-dollar) state-backed loan to keep the carrier aloft.
The struggling company meanwhile got a pat on the back from investors Monday who were clearly pleased with a weekend job-cutting deal with flight attendants, seen as clearing away a bankruptcy threat.
Alitalia shares in early afternoon deals were up 3.86 percent at 0.299 euros.
In all, the state-controlled airline, which nearly collapsed earlier this year, has agreed on 3,689 job cuts with unions representing pilots, ground staff and air crew.
While the figure is 26 percent fewer than the 5,000 deemed necessary by management, the agreements were thought to be enough to keep the company on course for targets in a 2005-2008 strategic recovery plan.
But union sources said Monday they were still not happy with details of plans to split the company in two, one reponsible for flight operations and the other for ground activities.
Alitalia wants to recapitalize the first company, to be called AZ Fly, and to open the second, AZ Services, to new investors.
But unions are insisting that a state holding company assume responsibility for both ventures and called for guarantees that workers' rights on current contracts be preserved.
Fabrizio Solari, secretary general of the Filt-Cgil union, said the Alitalia board on Monday would back the business plan for the company but would hold further talks with unions on the proposed re-organization into two entities.
Endorsement of the rescue program will enable the company to draw on a 400-million-euro (486.1-million-dollar) government-backed rescue loan.
Two other key issues 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.