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Alitalia may cut 4,200 jobs
ROME, Italy (Reuters) -- Carrier Alitalia could slash its workforce by up to 20 percent in the next three years if it fails to reach traffic growth objectives set out in its latest rescue plan. Italy's state-controlled airline said on Wednesday it could double to 3,000 the number of planned lay-offs between 2004 and 2006 if it does not reach nine percent annual growth in traffic, measured in tonnes transported. Including Alitalia's plans to outsource 1,200 jobs, the cuts could total 4,200 out of a workforce of about 21,300. Alitalia approved the industrial plan last week. It is key not only to return the airline to profit, but also for Alitalia to join the announced merger of Air France and KLM. But the job cut plans are set to further antagonise powerful labour unions which have already rejected Alitalia's plan and say they will take action to counter it. Strikes are expected. Alitalia badly needs to rein in costs if it is to regain financial strength. Chief Executive Francesco Mengozzi has said it would use up all its financial resources in 18 months unless it cuts costs by about eight percent. The airline, which posted a widening net loss of 315 million euros ($361 million) in the first half of this year, has blamed its troubles, like many of its rivals, on the fallout from the September 11 attacks, the war in Iraq and the impact on travel of the deadly SARS virus. It was already in the red before the 2001 attacks in New York and Washington, and the 2004-2006 plan is just the latest in a series of attempts to return to profitability. The plan forecasts a 29 million euro operating loss in 2004, then operating profits of 222 million euros in 2005 and 359 million euros in 2006. Alitalia is expecting a 409 million euro operating loss this year, against a 118 million-euro loss last year. Mengozzi has campaigned hard for Alitalia to be admitted into the Air France/KLM deal, a move which he sees key for ensuring the Italian carrier's long-term survival. But the French and the Dutch want Alitalia to improve its financial situation and privatise before sending an invitation to join in. The government owns 62 percent of Alitalia and though Prime Minister Silvio Berlusconi has pledged to privatise, the process has been slowed down by disagreements within the ruling coalition and uncertainty over its rescue plan. Alitalia shares were down nearly one percent at 0.27 euro by 1320 GMT.
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