Alitalia plans a major restructuring

Speaking on a visit to Greece, the Italian prime minister said no decision had been made on the board's future, but he thanked it for its hard work.

The dispute was triggered by the airline's plans for 2,700 job cuts to help it get back in the black by 2005.

News of Mr Berlusconi's announcement sent the firm's shares up by 4%.

Alitalia's management is "absolutely ready to ... step down if this were useful for the future of the company", Berlusconi said.

Walkouts

He was speaking after the Alitalia board asked the government to intervene to help it overcome its "current stalemate" with unions so that it can implement its cost-cutting 2004-2006 business plan.

This calls for 1,500 immediate layoffs and the outsourcing of a further 1,200 personnel.

When Alitalia first announced the proposal back in October it was forced to agree to suspend the proposal, such was the hostility of the reaction of the unions.

Unless it does now resign, the Italia board is planning to discuss the controversial business plan again on February 26.

The unions, which have already grounded hundreds of flights since the restructuring plans were first announced, have now announced plans to hold a 24-hour strike on March 5.

Berlusconi's government is also continuing to mull over a potential privatisation of Alitalia, but with both European and local elections in Italy this year, it appears unlikely that it will appear to sanction anything that causes mass job losses.