ROME (AFP) - Alitalia directors gave 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 Italian flag carrier aloft.
Alitalia's board "took note of the negotiations with the unions and improved the 2005-2008 industrial plan which forsees a series of radical operations in all areas" to stem the airline's financial hemorrhaging.
Earlier in the day the struggling company got a pat on the back from investors who were clearly pleased with a weekend job-cutting deal with flight attendants, seen as clearing away a bankruptcy threat.
Alitalia shares closed 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 about one quarter fewer than the 5,000 management called for, the agreements were thought to be enough to keep the company on course for targets in the 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.
Endorsement of the rescue program enables the company to draw on the 400-million euro 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 gave encouraging signs to the Italian government, saying the agreements were an important step in the process of restructuring Alitalia so that it remained viable.
A basic principle of EU competition law is that governments may help struggling companies, provided that any aid approved is to restructure on a viable basis and is not used to keep an inefficient entity going at the expense of rivals.
Alitalia has long been interested in tying up alliances, and in July company chairman Giancarlo Cimoli said an alliance with Air France-KLM was highly likely eventually because "we shall have to pay a penalty if we do not ally ourselves with them".
In September last year Alitalia, which already had a commercial 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.
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.
Despite fewer job cuts, Alitalia is still expected to come close to achieving the targets set in its business plan to 2008, the Italian daily La Stampa said on Sunday.
According to Monday's 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.