(Adds details, context, paragraphs 3-13)
By Agnieszka Flak and Alberto Sisto
MILAN/ROME, March 15 Alitalia airline expects to
return to profit by the end of 2019 by cutting operating and
labour costs by 1 billion euros ($1.1 billion) over the next
three years and revamping its business model for short and
The loss-making carrier, in which Etihad Airways has a 49
percent stake, also said it aimed to increase revenues by 30
percent to 3.7 billion euros over the same period under a new
2017-2021 restructuring plan its board approved on Wednesday.
Alitalia said it would seek to boost traffic and use of its
aircraft on short and medium-haul flights by providing more
attractive fares and charging extra for any additionals such as
choice of seats, checked-in luggage and food.
"If we can't compete throughout Italy and Europe against
low-cost carriers then we lose air travellers that connect onto
intercontinental flights. Put simply, there is absolutely no
alternative," Chief Executive Cramer Ball said, commenting on
the latest attempt at turning around Italy's problem child.
After buying into Alitalia in 2014, Etihad pledged to return
it to profit by 2017 by slashing costs, turning Rome into an
intercontinental hub and growing lucrative long-haul routes.
But the turnaround hit problems after low-cost airlines such
as Ryanair expanded aggressively in Italy, use of
high-speed trains has increased and after attacks across Europe
dented demand for travel. Today, Alitalia is losing at least
half a million euros a day, sources have said.
The airline said the new targets were judged to be
"realistic and achievable" by independent advisors.
However, doubts remain over whether Alitalia will succeed in
getting union support for the planned cuts which in turn is
necessary to unlock financing for the new restructuring plan.
While it gave no details on the financing options or
proposed redundancies, sources have said Alitalia may seek to
slash up to 2,000 jobs of the airline's 12,700 workers.
This is likely to put them on a collision course with unions
which have gone on strike over cuts in the past.
Alitalia will present the plan to the government on
Thursday, and would then meet unions.
The carrier also said it would seek to renegotiate contracts
for aircraft leasing, distribution, catering, ground handling
and at airports to bring them in line with the market. Its
narrow-body fleet would be reduced by 20 aircraft, it added.
The airline also plans to increase flights on the
higher-margin routes to the Americas. Analysts said any such
plan will depend on whether it succeeds in renegotiating the
terms of an existing transatlantic alliance with Air France-KLM
and U.S. carrier Delta Air Lines.
(Additional reporting by Valentina Za; editing by Grant McCool)