*Alitalia says its flight schedules will continue to operate as planned*
Alitalia is to file for extraordinary administration following a meeting of the beleaguered airline's shareholders.
The decision follows the rejection of a restructuring proposal by workers last month.
Alitalia's board said because of "the serious economic and financial situation of the company, of the unavailability of the shareholders to refinance, and of the impossibility to find in a short period of time an alternative", they had decided to proceed with the filing for extraordinary administration.
Etihad Airways and Italian shareholders had been prepared to recapitalise and finance the restructuring, and the airline points out that two-thirds of the structural cost cuts were unrelated to labour. Alitalia says the "negative vote" by employees resulted in an "inability" to proceed. The vote centred around a plan to cut jobs and salaries.
Its board says the airline faces a "serious economic and financial situation" and, given the "impossibility" of finding an alternative strategy, it has opted unanimously for filing for extraordinary administration.
Etihad, the Abu Dhabi airline that owns 49% of Alitalia, had been "committed to recapitalise and finance the plan with 2bn euros", but that without the approval of workers, it could not go ahead.
James Hogan, the CEO of Etihad Airways, which bought into Alitalia during the latest restructuring in 2014, said the Italian airline required "fundamental and far-reaching restructuring to survive and grow in future".
Will Alitalia be allowed to fail?
Alitalia has received more than 7bn euros (£5.9bn) from the Italian state over the last decade.
Rival airlines including Lufthansa and Norwegian Air have shown little interest in buying Alitalia and creditors have refused to lend more money, putting more pressure on the government to find a way to save the flag carrier. The government has ruled out renationalising Alitalia but has put in place a €400m bridging loan to allow the struggling airline to continue operations during the Bankruptcy proceedings. Alitalia an was once a symbol of Italy's post-war economic boom but is now struggling to compete at home against low-cost carriers.
The Italian public appear to be. supporting the government with Italians taking to social media in recent days calling for politicians to resist bailing the airline out again. An opinion poll published on Friday suggested 77% of Italians believe the airline should be left to fail.
The carrier is currently losing about €1 million per day and without government support risks running out of cash by the middle of May.