Alitalia (AZ, Rome Fiumicino) trade unions have rebuffed management's proposed 2017-2021 business turnaround plan following a formal presentation by CEO Cramer Ball last week.

Confirming previous reports in the Italian press, Ball said 2,037 out of Alitalia's 12,500-strong workforce would be laid off. The layoffs, which affect both temporary and permanent staff, will see the Italian carrier's administrative staff cut by 51% while staff in non-flying operational roles will be reduced by 20%. According to trade union officials who spoke to RAI news, pilots will also be required to take a pay-cut with medium-haul and long-haul flight crew salaries reduced by 28% and 22% respectively. Cabin crew wages will also be cut by 32%.

“Headcount reductions are a painful but necessary action that, alongside other cost reductions, will stabilise our financial situation and create long-term sustainability," Ball said in a statement. "These changes are essential if we are to compete effectively in the extremely tough European aviation market. Together with trade unions, and with the support of the Italian government, we will work respectfully and fairly at ways in which to minimise the impact of the business plan on our people.”

Concerning flight crews, unions have also raised the contentious issue of a collective labour agreement for 400 pilots whose current contracts expire at the end of the year. It is recalled that on its formal unveiling to the public last week, Ball said Alitalia's shareholders, which include Etihad Airways (EY, Abu Dhabi Int'l) and a consortium of Italian banks and firms, had conditioned funding for the plan on trade unions agreeing to a new collective labour agreement and headcount-related measures.

If given, the Corriere della Sera newspaper reports Italian banks UniCredit and Intesa Sanpaolo will provide Alitalia with loans for recapitalization. The cash will be deposited into a state-backed fund which will act as a guarantor in the event Alitalia is unable to make its repayments.

Trade unions have since rejected the plan calling for a 24-hour strike on April 5. To help diffuse the situation, the Italian government has called a meeting with union leaders and airline management for the afternoon of Monday, March 20, to discuss the plan and its ramifications. It will be attended by Minister for Economic Development, Carlo Calenda, Labour Minister, Giuliano Poletti, and the Minister for Infrastructure and Transport, Graziano Delrio.

Staff streamlining forms only a part of the plan which aims to reduce costs by EUR1 billion (USD1.06 billion) by 2019. Other measures include the pivoting of Alitalia's short-and medium-haul services to a more low-cost carrier-oriented mindset i.e. greater aircraft utilization, higher seating density, Buy-On-Board services, and the withdrawal of twenty surplus narrowbody aircraft by 2018. In the longhaul segment, Alitalia plans to introduce two widebody aircraft (one of which is a B777-300(ER)) in 2017 and 2018 for use in the proposed launch of ten new long-haul routes between 2019 and 2021. The carrier notes that if all goes according to plan, it may recruit up to 500 new crew members by 2019.