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date: 19 October 2017

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Alitalia enters administration - DTel

By Bradley Gerrard 2 MAY 2017 • 12:10PM Italy’s flag carrier Alitalia has said it will enter administration after a dispute with its workers hit an impasse. The airline’s directors met last month to discuss the outcome of a staff vote that saw its 12,500-strong employee base vote against proposed redundancies and salary cuts. The airline’s union had managed to negotiate down wage cuts from 30pc to 8pc as well as the number of predicted job losses, which Alitalia initially said would number 2,000. The loss-making airline, partly owned by Etihad, last year secured a reprieve from its creditors in a bid to agree a rescue plan to stem losses and bring in fresh financing. Alitalia’s creditors, including Unicredit and Intesa Sanpaolo, handed the carrier a short-term financing deal on the condition that it agreed an overhaul plan with its stakeholders within 60 days. Today the board said the negative outcome of the workers’ vote meant it could not implement its mooted restructure and €2bn (£1.7bn) recapitalisation, forcing it down the route of “amministrazione straordinaria” or extraordinary administration. The airline said its flight schedule would continue to operate as planned. The carrier reported a net loss of €199m (£169m) in 2015, a year in which it endured two separate strikes over longer working hours. These led to it grounding 150 planes at an estimated cost of half a million euros a day. Neil Smyth, partner in the restructuring & corporate recovery team at Taylor Wessing, said Alitalia was the “latest in a long line of national carriers facing an insolvency process” as pressure from low-cost operators bites. “Many airlines, particularly in the US, have used insolvency processes to drive through restructuring necessary to streamline their operations to enable them to remain competitive,” he said.
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