ALITALIA IS AWAITING responses from its main unions over plans for an 18-month ban on industrial action, which has become essential if the cash-strapped carrier is to go ahead with its badly needed recapitalisation.

The Italian flag carrier requires a cash injection of L1.5 billion ($950 million) to help rescue it from severe financial difficulties. Although Alitalia's parent, the state-owned IRI holding company, has said that it is prepared to put up L1 billion of the cash, the airline is looking for financial markets to provide another L500 million.

Alitalia has asked unions for the strike ban as a guarantee to private investors that the airline will not descend into another round of industrial action, which disrupted services through much of 1995.

Without the presence of private capital, Alitalia fears that the cash injection would be viewed as state aid by the European Commission (EC), therefore attracting harsh restrictions on the airlines expansion, just as Europe completes deregulation. Iberia won its prolonged battle for state aid only by promising to sell most of its outside holding and make swinging cuts.

IRI has anyway confirmed that it will only go ahead with its part of the recapitalisation if outside investors are also brought in, while the Italian Government appears to have ruled out direct state aid.

Alitalia is also attempting to win union agreement over an accelerated restructuring plan, designed to put the carrier back into profit over the next two years. Most of the unions have agreed to the plan, which includes wage cuts and productivity increases, but the pilots unions have been holding out.

They claim that a secret deal was struck with Roberto Schisano, before his removal as Alitalia chief executive in 1995, under which pilots would receive a L28 million wage rise, spread over three years, beginning in 1996.

Alitalia says that no such deal exists and that the contracts have to be renegotiated.

Source: Flight International