By Staff writer
James Hogan says vote outcome means that all parties will lose; supports call for meeting of shareholders on Thursday
The boss of Etihad Airways, which owns 49 percent of troubled Italian airline Alitalia, said he deeply regretted a decision by Alitalia staff to reject a last-ditch restructuring deal, blocking a recapitalisation and sparking fears that the carrier may be grounded for good.
The future of Alitalia was in doubt on Tuesday, with James Hogan, president and CEO of the Etihad Aviation Group and vice chairman of Alitalia, calling the ballot result "deeply disappointing".
The government had warned that there was no alternative to the plan which called for 1,700 job losses and an eight percent salary cut.
But unions said more than two-thirds of voting employees threw out the proposal, which had earlier this month been approved by both management and unions, after almost 90 percent of the airline's 12,500 employees participated in Monday's ballot.
Italian government ministers expressed "surprise and regret" at the outcome in a joint statement, saying it put the company's recapitalisation efforts at risk.
Hogan said in a statement: “We deeply regret the Alitalia staff vote outcome, which means that all parties will lose: Alitalia’s employees, its customers and its shareholders, and ultimately also Italy, for which Alitalia is an ambassador all over the world.
“Alitalia’s shareholders, including Etihad Airways, have provided vast amounts of financial and commercial support during the past three years. Jointly with the Italian shareholders, Etihad had reaffirmed its strong commitment and principal willingness to support the airline with a package worth nearly €2 billion in aggregate to help fund Alitalia’s new five-year business plan.
"A key condition to this commitment was that an agreed and concerted effort would be made by all interested parties, including the unions.
“The preliminary agreement with unions that was made possible and supported by the union leaders, Alitalia management, the Italian Prime Minister and three government ministers would have helped secure Alitalia’s future. The rejection of this agreement in the staff ballot is deeply disappointing.
“As a minority shareholder in Alitalia we support the board’s decision today to convene a shareholder’s meeting on April 27, to start preparing the procedures provided by the law.”
Alitalia's board of directors met Tuesday, a public holiday in Italy, "to evaluate the negative outcome of the referendum".
After the meeting, the directors said they were now faced with the "impossibility" of proceeding with plans for a 2-billion-euro capital increase, including 900 million of fresh money, to keep the company afloat.
The board decided "to initiate proceedings provided for by the law", without giving details, and convened a shareholder meeting for this Thursday.
The company is de facto controlled by Etihad Airways, which acquired a 49-percent stake when it saved Alitalia from bankruptcy in 2014.
The Emirati airline entered the partnership declaring its intention to transform Alitalia into a leaner operation with industry-leading service standards - both goals that it has failed to deliver upon, according to industry analysts.
Alitalia has been hit hard by competition from low-cost companies and has been accumulating losses for years.
The company had previously targeted a return to the black in 2017 but its losses amounted to 460 million euros last year and are forecast to be on a similar scale this year.
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Why did they invest in Alitalia in the first place?
Many people asked this question at the time.
Maybe it is a very long term play. Waiting for workforce to reduce
Maybe the can strong arm the unions to accept some early retirement plan and bring a new workforce on different terms...
or maybe it was a miscalculation.
Never understood why Etihad invested so much money in a union-dominated airline which for decades has never produced a profit, not even a black zero!