Italian flag carrier plans further cuts, but could face union opposition if it decides to transfer some routes to Volare

Italian carrier Alitalia has cut its losses for the first half of 2002 and says it will achieve breakeven for the full year. The improved results come as the airline plans to cut costs further, which could see it transfer some routes to Volare Group - a move that would meet union resistance.

Alitalia's after-tax losses were €49 million ($48 million), compared with a €260 million deficit for the same period in 2001. The net results were boosted by a one-off payment of €117 million from the sale of the Sigma information technology department to the Cendant group. In the first six months of this year, Alitalia's consolidated sales dropped by 12% to €2.39 billion, less than the fall in capacity (-22%). Managing director Francesco Mengozzi says the results are better than expected.

Alitalia is considering two options for implementing a low-cost policy, by reducing its own operating costs by about 50% - which is seen as unlikely - or transferring several routes to Volare, which signed a commercial agreement with Alitalia last July. Volare already has its own plans to launch a low-cost operation, a move aided by its low personnel costs.

But any attempt to give up Alitalia routes to Volare would face strong opposition from the national carrier's pilots.

Source: Flight International