Alitalia's cost-cutting deal unlocks a vital government loan

The firm's chief executive was holding a final meeting with unions in Rome on Monday ahead of a board meeting called to sign off the deal.

Alitalia shares rose 4% to 0.31 euros in Milan on Monday morning.

Without a deal on radical restructuring and a 400m euro ($485m; �270m) loan,the Italian flag carrier risked running out of money within a month.

Under European Union rules, the government-backed loan must be repaid within a year.

Pay down, hours up

The airline's future therefore depends on whether the plan to reshape it can succeed.

Alitalia will split its operations into two parts: AZ Air will run flights, while AZ Services will handle the ground services portion of the business.

It had originally hoped to reach a deal which would see 5,000 jobs go, out of a workforce currently numbering 20,700.

But chief executive Giancarlo Cimoli has secured widespread pay cuts along with increased working hours.

Union agreement still depends on government support for the employees who will lose their jobs.

Staff representatives are also concerned about the future of AZ Services, which is set to be spun off. They want it to remain under some government control.