Alitalia 2005 Losses Narrow Sharply

ROME_Ailing Italian flagship carrier Alitalia said Monday it had narrowed its 2005 losses to €167 million (US$197.9 million) - an improvement of nearly €700 million (US$829.6 million) compared with the previous year.

The company released its 2005 results a day before the latest summit of government officials, management and unions leaders over the airline's battle for survival.

Alitalia said in a statement it had narrowed its loss by €691 million (US$819 million) from 2004 due to higher revenues and lower labor costs.

The company also said 2005 revenues rose 11.6 percent to €4.8 billion (US$5.7 billion) from 2004 as the numbers of passengers traveling on Alitalia increased by 7.8 percent to 23.9 million. Alitalia said labor costs fell by €114 million (US$135.1 million), according to the new International Financial Reporting Standards, in line with a four-year rescue plan the carrier approved last year.

"The measures undertaken during 2005 have allowed (the company) to experience, overall, marked improvements on Alitalia's economic and operative progress ... registering a definite trend reversal compared with the recent past," the carrier said.

Alitalia, struggling with labor costs, has posted a profit in just four of the past 16 years, and, like other longtime European carriers, is buffeted by fierce competition from upstart budget airliners. Soaring fuel costs have also complicated Alitalia's turnaround efforts.

Alitalia lost €520 million in 2003, while in 2002, it managed to post a small profit of €93 million.

Unions approved a 2004 plan including job cuts and a spinoff of the flight unit from the less profitable ground services businesses. But they claim Alitalia has not kept to its word on working conditions.

Last week, Italy's industry ministry announced that the labor and industry ministers would meet on Feb. 28 with the heads of Italy's main labor federations and unions for Alitalia's pilots, as well as other workers and airline management.

Labor Minister Roberto Maroni has repeatedly warned the unions that the government cannot bail out Alitalia, which has been hoping that job cuts, other restructuring and a €1 billion (nearly US$1.2 billion) capital increase can save it.

Earlier this year, a spate of wildcat strikes over the restructuring plans raised further questions about Alitalia's viability.

Premier Silvio Berlusconi's government, which holds a 49.9 percent stake in Alitalia has talked tough, but with elections scheduled for April, the government can ill-afford the collapse of the national carrier.

Alitalia on Monday night stuck to a prediction made last month that it will return to profit this year, but warned the outlook could change after a board meeting March 10 to evaluate the damage from the recent strikes.