Alitalia could cut up to 2,000 jobs as controlling shareholder Etihad Airways pushes for sweeping changes to turn the loss-making airline around, according to sources. As Ciara Lee reports, it comes as Lufthansa cancels 830 flights on Friday as pilots extend their strike.
It was the deal that was supposed to change the fortunes of Italy's Alitalia. 560 million euros invested by Etihad Airways two years ago, part of a wider 1.7 billion euro rescue plan. But sources say Alitalia could be about to slash up to 2000 jobs. And potentially ground at least 20 planes as it struggles to compete with low-cost rivals and high-speed trains. (SOUNDBITE) (ENGLISH) HEAD OF GLOBAL EQUITIES AT HENDERSON GLOBAL INVESTORS, MATTHEW BEESLEY, SAYING: "Alitalia has been a struggling airline for from a cost potential and a revenue return potential for multiple decades now, simply because the company has never really grasped the nettle of restructuring that many of the other flag carrier peers across Europe have - obviously very successfully, British Airways now part of IAG with Iberia, but also to some degree, Lufthansa and Air France too." The news comes amid deepening challenges across the sector - Lufthansa now in day 3 of its pilots strike. One of Europe's biggest airlines, it's canceled over 2,600 flights since pilots began a strike on Wednesday. The airline's shares are down more than 13 percent this year with neither pilots or management looking any closer to backing down. (SOUNDBITE) (German) EXECUTIVE BOARD MEMBER OF PILOTS UNION, 'VEREINIGUNG COCKPIT', JOERG HANDWERG, SAYING: "If Lufthansa's Chief Executive says there is no leeway to find a solution and that Lufthansa will go bankrupt if it pays pilots even just one euro more, then I ask myself how serious their arbitration offer can be." Etihad had pledged to return Alitalia to profitability by next year. But sources say it will likely remain loss-making for the next two to three years. And the implications could be significant for the Italian government - just days from a referendum on reforms that Prime Minister Matteo Renzi has staked his political future on.