Alitalia's board of directors has approved a turnaround plan
estimated to cut €1 billion in costs and make the carrier profitable over the
next three years.
Alitalia will shift more to a low-cost carrier model on
flights within Europe. That will include fees for seat selection, checked
luggage and priority boarding. The carrier also will begin charging for meals
on flights shorter than four hours, according to Alitalia CEO Cramer Ball.
Intercontinental flights will maintain a full-service model.
"Only through radical change will Alitalia's fortunes
be turned around," Ball said. "The radical and necessary measure
across the entire airline will secure our long-term sustainability, which will
only materialize if the airline is the right size, the right shape and with the
right productivity and cost base."
Alitalia also plans to reduce costs by renegotiating
contracts to bring itself in line with competitors, including contracts with
global distribution systems.
To improve its network, the carrier plans to cut 20
narrow-body aircraft from its fleet by 2018 and increase service to the Americas,
which it called "one of its most underserved markets." It also plans
to build up service from Milan, Sicily and Sardinia.
Alitalia estimates the changes not only will cut costs but
also will increase revenue 30 percent to €3.7 billion by 2019. The carrier, of
which Etihad owns a 49 percent stake, reported a €199.1 million loss in 2015
and a €580 million loss the previous year.
The
plan will require Alitalia's trade unions to approve a new labor agreement and headcount
reduction. The carrier will present its plan to the Italian government before
beginning discussions with the unions.