Italy's Alitalia aims to slash about a third of its more than 20,000-strong work force and move another third into a spin-off company under a do-or-die rescue plan for the flag airline, union sources said on Tuesday.
The grim proposal was revealed to union leaders during a meeting with Chief Executive Giancarlo Cimoli, who took over Alitalia's top job in May after wildcat strikes brought the airline to the brink of collapse.
Under Cimoli's current proposal, which is expected to be presented in its final form next week, the slimmed-down carrier would emerge as AZ Fly with around 7,000 employees.
A second company, called AZ Service, would absorb 6,500 former Alitalia workers, while the remaining 6,500-7,000 positions would be eliminated under the plan, the sources said.
Alitalia, which has warned it is on course to run out of cash by the end of September, declined to comment on the figures.
Management is demanding a union agreement by Sept. 15 to unlock a 400 million euro ($483 million) emergency bridge loan, after which time the government warns it may be forced to put Alitalia into administration.
Lack of agreement would also be a blow to the government of Prime Minister Silvio Berlusconi, whose center-right government is prohibited by EU regulations from bailing out the company.
Opposition accuses government
The political opposition made an issue of the very real possibility that Alitalia, a symbol of Italy's post-war economic prowess, might go bust.
"All European flag carriers are in crisis, but only Alitalia risks going out of business," said Ugo Intini, a Socialist parliamentarian who accused the government of ineptitude in dealing with the crisis.
Berlusconi has said that Alitalia's problems began under center-left administrations in the 1980s and 1990s.
Shares in the airline, which is 62 percent owned by the Italian state, briefly touched a lifetime low of 0.187 euros before recovering to be down 1.24 percent at 0.1915 euros in late afternoon trading.
The airline's 750 million euro convertible bond fell to a new low of 57.75 percent of face value, down from Monday's earlier record of 58 percent. It closed higher at 58.88 percent of face value.
"It's really on a knife's edge. Either they (the unions) are willing to negotiate or they're not, and the pricing of the stock and the bonds is reflecting that," an airline analyst said.