Amid widespread labour unrest in Italy's transport sector, including strikes by airline staff and air traffic controllers, the government asked Alitalia to suspend the implementation of its new business plan. This turnaround blueprint, devised by the USTurnworks consultancy, laid out a raft of cost-cutting measures including 1,500 job losses and a major outsource drive. The aim of the plan is to take Alitalia to breakeven this year and into profitability in 2005.

The government, Alitalia's major shareholder, asked the carrier's management to suspend the plan until the end of January to give it more time to mediate with labour unions and avoid further industrial action. There had already been some action by Alitalia staff in late 2003. However, the bid failed to avert an eight-hour strike on 19 January that saw the airline cancel 364 flights, causing major disruption.

While government, airline and union negotiators try to find a solution to the impasse, Alitalia has already said the tough steps outlined in its business plan are essential to its turnaround strategy and cannot be put off any longer.

According to David Jarach, professor of air transport marketing at SDA Bocconi University in Milan: "It is true that Alitalia needs to reshape itself, particularly in concentrating on regaining marketshare in Italy where it has lost 30% of its share, perhaps by acquiring another player, and it needs to focus on improving its long-haul network which is now very weak."

But there is a danger such moves will be delayed over the disputed business plan. "This may have to be amended, perhaps with fewer job losses and job outsourcing and with more emphasis on a commercial growth strategy," says Jarach.

Source: Airline Business