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Alitalia faces 5,000 to 6,000 job cuts in relaunch plan

Jul 07, 2008

MILAN - The plan to relaunch Alitalia SpA being prepared by Intesa Sanpaolo SpA includes 5,000 to 6,000 job cuts and new capital of 700 million to 800 million euros, Corriere della Sera newspaper reported.

In an unsourced report Sunday, the newspaper said the new airline, which will put Alitalia together with Italy's Air One carrier, will require a change in the law for special administration of companies.

Problem areas in finalising the relaunch include negotations with trade unions on the job cuts, as well as the price of fuel, it said.

The government is aiming to privatise the 49.9 percent state-owned airline.

The newspaper said annual sales of the new relaunched airline are targeted above 4 billion euros, including those of Air One, which is privately owned by Carlo Toto, it said.

The aim of the plan is to create an airline with a strong domestic market share, similar to Air France-KLM (nyse: AKH - news - people ) or Deutsche Lufthansa AG (other-otc: DLAKY.PK - news - people ), which have 80 to 90 percent domestic shares, it said.

To overcome possible antitrust opposition, such as on Milan-Rome routes, the government could ask the antitrust authority to stop any action until the high speed rail Milan-Rome link at end-2009.

Alitalia's activities at Milan's Malpensa airport will be boosted after the recent decision by the airline to end hub operations there, it said.

The relaunch will require a change to the so-called Marzano law used in the administration of Parmalat and Cirio to restructure companies that failed, because of Alitalia's particular circumstances, it said.

This financial restructuring will see the entry of new shareholders, putting up 700 million to 800 million euros, with Toto exchanging his ownership of Air One for shares in the revamped Alitalia, it said.

Another around 10 shareholders found by consultant Bruno Ermolli, who worked on behalf of prime minister Silvio Berlusconi, will make up the rest of the new capital, it said.

On timing, the business plan, legislative change, recruitment of shareholders and putting into administration will take place by mid-August, with union talks on job cuts after that, it said.

Il Sole 24 Ore in its Sunday edition said each of the new shareholders will be asked to put up 50 million to 100 million euros.

Alitalia faces 5,000 to 6,000 job cuts in relaunch plan

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