Alitalia is making heavy losses

Under the plan Alitalia chief executive Marco Zanichelli - who had only been in the job since February - has resigned, along with chairman Giuseppe Bonomi.

They have been replaced by former Italian railways chief Giancarlo Cimoli who will take over both jobs.

Alitalia had been calling for job losses, but no details were announced.

The company wanted to cut 16% of its 20,000-strong workforce - a proposal the unions previously rejected outright.

Full details of the re-organisation of the mostly state-owned carrier will be announced within days, officials said.

'No more strikes'

The agreement comes after four days of talks between the government, unions and the airline's directors.

Sandro Degni of the UGL union said all nine unions were prepared to accept the proposal.

I really think the new plan will be different from the old ones Sandro Degni, UGL union

Government officials said workers had pledged not to take further strike action.

Last week, Alitalia was forced to cancel hundreds of flights over three days as a result of strike action over the possible job cuts.

Trading in Alitalia shares was due to reopen on Friday after having been suspended since Wednesday pending the outcome of the talks.

Analysts now expect new boss Mr Cimoli to split Alitalia into a pared-down flight-operating arm and another holding company to handle other operations - a plan mooted in the past as a way to relieve the airline of its debts.

According to some sources Alitalia lost between 200m ($241m; �135m) and 250m euros in the first four months of 2004.