Italian flag carrier Alitalia has agreed on a restructuring plan, including cuts to unprofitable routes to reduce costs after the attacks on the US.

Alitalia said it would withdraw from all non-core business and focus it schedules on hubs in Rome and Milan.

"We will redesign the network to focus on selected flows of traffic, cutting feeder routes that are not self-sufficient in terms of profitability ... Those cuts will be compensated for by reinforcing activity to our major destinations," the company said in a statement.

It has also decided to seek damages against the European Union for a ruling that the airline's recapitalisation plans amounted to state aid.

The carrier said it had not yet decided on a fleet reduction or to ask for more money from the government, its majority share owner.

News of the airlines board meeting sent shares soaring at the start of trade but they were suspended after hitting the 10% trading limit.

More cuts

Last month, Alitalia cut 10% of its workforce and said it would mothball or sell around 12 aircraft and stop flying several routes to stem further losses.

But the company's financial woes date back to before the sharp fall in passenger volumes prompted by the attacks.

Alitalia recorded a loss of 503bn lire in the first half of this year.

It will benefit from an Italian government aid package for its airlines worth up to 400bn lire ($190m), unveiled shortly after the attacks on US targets.

The Italian carrier said after the EU decision on 18 July to block a capital injection by the government, that would seek damages but no figures have been revealed.

In 1997, the EU approved the 2.75 trillion lire ($1.3bn) in aid but the European Court of Justice ruled against the decision.