=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2004/02/27/f= inancial1542EST0234.DTL ---------------------------------------------------------------------- Friday, February 27, 2004 (AP) Alitalia board names new CEO after Mengozzi's restructuring plan splits gov= ernment, enrages unions ALESSANDRA RIZZO, Associated Press Writer (02-27) 12:42 PST ROME (AP) -- After weeks of labor protests against Alitalia's cost-cutting plan, the struggling airline on Friday named director general Marco Zanichelli to replace CEO Francesco Mengozzi -- a move that some analysts fear might weaken the company's restructuring. Mengozzi's departure had been expected after he clashed with Premier Silvio Berlusconi's government over a restructuring plan at the state-run airline. Zanichelli is a longtime company executive. Berlusconi announced the change Friday and Alitalia's board confirmed it at a meeting later in the day, according to a company statement. Chairman Giuseppe Bonomi kept his post. "It was the only viable solution we have found a political agreement on," Berlusconi was quoted as saying by the Italian news agency AGI. Berlusconi's coalition had reportedly been split over how to replace Mengozzi, and on the overall strategy to save the company, in which the government has a 62 percent stake. The decision Friday capped a week of meetings devoted to the crisis, including last-minute talks Friday. Mengozzi had been named to the post in February 2001. Recently, he had warned he would leave unless the government threw its support behind the plan. Berlusconi has been reluctant to endorse Mengozzi's plan, which cuts 2,7= 00 jobs -- especially ahead of European and local elections this spring that are seen as a test of his government's popularity. The plan was designed to turn around the company, which has achieved operating profit only once in the past 11 years. The expected operating loss for 2003 was 400 million euros ($500 million) versus an operating loss of 233 million euros in 2002. Mengozzi had hoped his plan would make the Italian carrier fit to join an alliance with Air France and KLM -- a pact that would give Alitalia more financial clout, lower costs, and greater reach on long-haul routes. Some analysts have said his departure dashes Alitalia's hopes of joining the alliance. They say a watered-down plan may not be enough to qualify Alitalia to join the merger. Air France and KLM have insisted that Alitalia should clean up before joining. The Dutch company said that Alitalia's privatization remains a requirement for it to join the merger. But Berlusconi has ruled out immediate privatization. Mengozzi had insisted Alitalia should be sold. Zanichelli has worked at Alitalia since 1989, arriving from state-held steel company Dalmine. The 56-year-old Zanichelli rose through the ranks at the national carrier, becoming general director in May last year. He will retain that title as well as assume the title of CEO. Friday's shake-up also included the appointment of Alitalia's chief financial officer, Luca Egidi, and the chief production officer, Glen Houenstein, as vice director generals. Over the past weeks, Alitalia has faced protests by the country's powerf= ul unions, angry over the job-cutting measures. The unions have staged a series of strikes that have disrupted air travel, and have planned a 24-hour walkout March 5. It was not immediately clear if they would go ahead after the shake-up. Mengozzi wants to shed 12 percent of Alitalia's work force of 21,300 -- 1,500 through layoffs and 1,200 by outsourcing jobs. That is 12 percent of the company's work force. ---------------------------------------------------------------------- Copyright 2004 AP