Italian govt may find new jobs for redundant Alitalia staff

Cash-strapped flag carrier sacking 2,251 people in Etihad deal

27 June, 19:50

    (By Emily Backus) (ANSAmed) - ROME, JUNE 27 - Cash-strapped Alitalia on Friday confirmed it will lay off 2,251 employees as part of an expected 560-million-euro investment deal with Abu Dhabi-based airline Etihad, but the government said it was considering measures that would provide new jobs for some of them. Transport Minister Maurizio Lupi said the government of Premier Matteo Renzi was meeting next week with union leaders with the hope to reach a deal by July 15 on what to do with redundancies from the Italian flag carrier, whose contracts fall under the transport ministry.

    A deal could include putting laid-off employees back to work as outsource service providers, as well as relocation packages within Italy, Lupi said after meeting with Labor Minister Giuliano Poletti. Pending regulatory approval, Etihad's investment to buy 49% of Alitalia is expected to close "in the coming months," Etihad said in a statement Thursday. So far unions have refused to accept the job losses, which would take a large chunk out of the current workforce of 14,000 employees at Alitalia, which has been struggling for years to restructure and remain competitive.

    The deal also requires restructuring Alitalia's debt, reported to be 813 million euros at September 30, 2013.

    The Financial Times reported that about a third of the company's short-term debt would be written off with the remaining two-thirds swapped with equity, citing a person close to the deal. The FT said Alitalia's two largest creditors, Intesa Sanpaolo and Unicredit, would not confirm the report. The large stake to be taken by Etihad had triggered concerns with the European Commission, which warned Italian authorities to ensure the United Arab Emirates carrier does not gain a majority holding.

    "In Europe we are considered dangerous competitors because we are allowing entry to the Arabs. Alitalia holds 47% of the national market," said Vito Riggio, chairman of the Italian civil aviation authority ENAC. EU rules require that majority ownership of European airlines remains in European hands, and the Italian government has reassured the EC that those rules were being obeyed.

    Italy "respects all the laws on air transport," said Lupi.

    The transport minister also countered accusations that government financial assistance was involved in the deal.

    "There is no help from the State". The tie-up would allow Etihad to expand its roots in the lucrative European market while giving new life to Alitalia, which was subject to a government-led bailout last fall - only the latest in a series of restructuring attempts over many years to salvage the struggling carrier.

    The government spearheaded a 500-million-euro bailout that included a 75-million-euro investment by Poste Italiane while code-share partner KLM-Air France declined to sink any further money into Alitalia.

    A chorus of European airlines have complained to regulators that the deal contravenes European Union rules also because Etihad is government-owned. (ANSA,ed).

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