[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Thursday, 13 October 2005, 14:53 GMT 15:53 UK
Alitalia unions agree cost deal
Passengers talk near an Alitalia plane in Rome
Banks and creditor companies have been watching Alitalia closely
Alitalia, Italy's troubled national airline, has reached an agreement with labour unions aimed at saving it 65m euros (44m; $78m) a year from 2006.

Chief executive Giancarlo Cimoli had warned unions that failure to strike a deal could mean the end for the firm.

The agreement will boost productivity and streamline management, as well as giving greater labour flexibility.

It also paves the way for a the firm's new business plan, which has been eagerly awaited by creditor companies.

Alitalia is planning to boost its capital by as much as 1.2bn euros later this year and Mr Cimoli needs to show investors that he can halt the company's losses and make it a viable business.

In the meantime, the government is providing loans to keep the company running.

'Essential element'

Alitalia said it will meet on Friday to discuss a new business plan that will run until 2008.

"The agreement thus contributes to the launch of a recapitalisation, which is an essential element for giving certainty to the company and employees," Alitalia and the unions said in a statement.

The deal covers pilots, flight attendants and ground staff, and is part of 170m euros of cost cutting that need to be identified.

There had been rumours that the company would announce a number of job cuts and wage reductions. A spokesman said that the deal does not include job cuts or pay reviews.

Many airlines have been suffering from high oil prices which have raised the cost of jet fuel. At the same time, ticket prices are under pressure as low-cost carriers offer bargain fares.


SEE ALSO:
EU to probe Alitalia 'state aid'
19 Jan 05 |  Business
Rome defends its aid to Alitalia
18 Oct 04 |  Business
EU studies Alitalia restructuring
14 Oct 04 |  Business
Alitalia secures 400m euro loan
11 Oct 04 |  Business
Staff layoff deal for Alitalia
06 Oct 04 |  Business


RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific