Financially beleaguered Italian Airline Alitalia had laid out plans to conduct its first mass termination of employment since its privatization back in 2008. The purpose of the mass layoffs would be to cut costs yet this measure may not be sufficient to persuade top shareholder Air France-KLM for a rescue package on a cash call.

Acclaimed 'turnarond specialist' Alitalia Chief Executive Officer Gabriele del Torchio is expected to submit his plan at a board meeting at 1700 GMT on Wednesday. Many sources said that the plan may include termination of about 2,000 employees as well as salary cuts to make Alitalia profitable in the long run.

This would leave Alitalia shareholders just one day to reach a decision on whether or not the proposed plan would merit their approval for the release of a EUR300 million or USD400 million cash call to keep the Italian flag carrier operational. For its part, Air France-KLM had already written off its 25% shareholdings to a value of zero. It had reiterated that it would only inject more cash into the airline under 'very strict conditions'. 

One source with knowledge of the matter said the participation of the French-Dutch group would be 'very low' because it sees the debt of Alitalia totalling EUR813 million by September's end as too high. Now, the future of the airline is left in the hands of the banks who need to pare down its debt, according to the source.

The source added, "The industrial plan (including 2,000 job cuts) is heading in the right direction, but the financial plan doesn't guarantee Alitalia's medium term future."

Investors, including Air France-KLM have been given until Friday to decide on the strategy to be employed based on an initial plan drawn up by CEO Del Torchio. It would also have the same amount of time to decide if they want to subscribe to the capital hike being sought approved.