Alitalia is filing for ‘extraordinary administration’ – similar to US Chapter 11 protection from creditors – after staff rejected a cost-saving rescue plan.
The decision came today following a meeting of shareholders, including 49% stakeholder Etihad Airways.
The Italian flag carrier insisted that its flight schedule “will continue to operate as planned”.
But a statement from the airline said that the board of directors took the action to enter administration after acknowledging the “serious economic and financial situation of the company, of the unavailability of the shareholders to refinance, and of the impossibility to find in a short period of time an alternative”.
The shareholders meeting “noted with deep regret” the outcome of a ballot among employees to oppose the proposed restructuring which would have led to almost 1,000 redundancies from the 12,500-strong workforce and an 8% pay cut.
“The negative vote has determined the inability to implement the relaunch and restructuring of the company,” Alitalia said.
“Italian shareholders and Etihad, based on the strong potential growth of the company, and on an industrial plan which included a structural cost reduction of which two thirds were not related to labour costs, were committed to recapitalise and finance the plan with €2 billion.
“This commitment was subject to an agreement with the trade unions, which was rejected by the employees in a referendum.”
The extraordinary administration under Italian law allows the government’s economic development ministry to appoint commissioners responsible for deciding whether the airline has a viable chance of survival or whether it should face liquidation.
No timeframe was given for how long this will take, although the administration process protects the airline from creditors.
Etihad chief executive James Hogan said: “We have done all we could to support Alitalia, as a minority shareholder, but it is clear that this business requires fundamental and far-reaching restructuring to survive and grow in future.
“Without the support of all stakeholders for that restructuring, we are not prepared to continue to invest.”
The Italian government last night granted Alitalia a €600 million bridge loan for the next six months to enable the airline to continue operating.