ROME: The future of Italian airline Alitalia was in doubt Tuesday after staff rejected a last-ditch restructuring deal, blocking a recapitalisation and sparking fears that the carrier may be grounded for good.

The government had warned that there was no alternative to the plan which called for 1,700 job losses and an eight-percent salary cut. The company’s coffers are empty.

But unions said more than two-thirds of voting employees threw out the proposal, which had earlier this month been approved by both management and unions, after almost 90 percent of the airline’s 12,500 employees participated in Monday’s ballot.

Italian government ministers expressed “surprise and regret” at the outcome in a joint statement, saying it put the company’s recapitalisation efforts at risk.

“At this stage, as we await the decisions of Alitalia’s current shareholders, the government’s aim is to keep the cost to Italian citizens and passengers to a minimum”, they said.

Meanwhile, Alitalia’s board of directors met Tuesday, a public holiday in Italy, “to evaluate the negative outcome of the referendum”.

After the meeting, the directors said they were now faced with the “impossibility” of proceeding with plans for a 2-billion-euro capital increase, including 900 million of fresh money, to keep the company afloat.

The board decided “to initiate proceedings provided for by the law”, without giving details, and convened a shareholder meeting for this Thursday.

Unions had earlier called on shareholders and the government “to avoid any traumatising and irreversible decisions”.

But Italian press reports said the airline’s directors may quickly ask the state to call in special administrators to prepare a possible takeover or liquidation.

The company is de facto controlled by Etihad Airways, which acquired a 49-percent stake when it saved Alitalia from bankruptcy in 2014.

The Emirati airline entered the partnership declaring its intention to transform Alitalia into a leaner operation with industry-leading service standards - both goals that it has failed to deliver upon, according to industry analysts.—AFP