MIAMI — The workers of Alitalia have rejected a management restructuring plan signed 10 days ago by management and labor unions to save the airline from collapse by cutting wages and laying off employees, betting that the government will intervene to draft an alternate rescue plan.

The vote against the agreement puts at risk the financial aid required to keep Alitalia afloat, which means that the airline faces a potential demise.

Late Monday, Paolo Gentiloni, the Italian prime minister, called ministers for talks on the future of the Italy’s flag carrier, established 70 years ago.

Owned 49 per cent by Abu Dhabi-based Etihad Airways, Alitalia has failed to make a profit, due to the growing competition from low-cost carriers, and the impact of terror attacks on the European air travel market.

Based on this James Hogan, President and Chief Executive of the Etihad Aviation Group, and Vice Chairman of Alitalia, said:

“We deeply regret the Alitalia staff vote outcome, which means that all parties will lose: Alitalia’s employees, its customers and its shareholders, and ultimately also Italy, for which Alitalia is an ambassador all over the world. Alitalia’s shareholders, including Etihad Airways, have provided vast amounts of financial and commercial support during the past three years. Jointly with the Italian shareholders, Etihad had reaffirmed its strong commitment and principal willingness to support the airline with a package worth nearly €2 billion in aggregate to help fund Alitalia’s new five-year business plan. A key condition to this commitment was that an agreed and concerted effort would be made by all interested parties, including the unions. The preliminary agreement with unions that was made possible and supported by the union leaders, Alitalia management, the Italian Prime Minister and three government ministers would have helped secure Alitalia’s future. The rejection of this agreement in the staff ballot is deeply disappointing. As a minority shareholder in Alitalia we support the Board’s decision today to convene a shareholder’s meeting on April 27, to start preparing the procedures provided by the law.”

Earlier this year, Alitalia tried to regain its course by cutting €1bn in costs, in order to return to profit by the end of 2019, with up to 2,000 layoffs and salary cuts of up to 30 per cent. In a deal announced last April 14, the labor unions accepted the plan, subsequently rejected by the employees on Monday’s vote.

Alitalia [Deep Dive #6]

Alitalia’s board will meet today to evaluate the negative outcome of the referendum, and to define the next steps, which could involve a request for extraordinary administration in anticipation of a possible bankruptcy.