Loss-making Italian airline Alitalia's employees have rejected a management restructuring plan that involved cutting jobs and salaries.

One of the options now is that the airline could be wound up.

Alitalia, owned 49 per cent by Abu Dhabi-based Etihad Airways, has always been bailed out by Italian governments and private investors in the past and staff hope the same thing will happen again.

The restructuring plan involved cutting 1,700 ground staff jobs and cutting salaries among flight personnel by eight per cent in an effort to stem losses of at least EUR500,000 a day.

Currently under protection from creditors, the government now might opt for a further commercial revamp of the airline (perhaps through a partial or total sale) or start the liquidation process.

"This was a painful (employee) vote but a determined one against a company that until now has done little to fix its issues," staff unions said in a joint statement, adding that they hoped a way forward could be found.

After buying into Alitalia in 2014, Etihad promised to return it to profitability by 2017, but the turnaround has not materialised.

James Hogan, president and chief executive of the Etihad Aviation Group and vice chairman of Alitalia said:  “We deeply regret the Alitalia staff vote outcome, which means that all parties will lose:  Alitalia’s employees, its customers and its shareholders, and ultimately also Italy, for which Alitalia is an ambassador all over the world.

“Alitalia’s shareholders, including Etihad Airways, have provided vast amounts of financial and commercial support during the past three years. Jointly with the Italian shareholders, Etihad had reaffirmed its strong commitment and principal willingness to support the airline with a package worth nearly EUR2 billion in aggregate to help fund Alitalia’s new five-year business plan. A key condition to this commitment was that an agreed and concerted effort would be made by all interested parties, including the unions.

“The preliminary agreement with unions that was made possible and supported by the union leaders, Alitalia management, the Italian prime minister and three government ministers would have helped secure Alitalia’s future. The rejection of this agreement in the staff ballot is deeply disappointing.

“As a minority shareholder in Alitalia we support the Board’s decision today to convene a shareholder’s meeting on April 27, to start preparing the procedures provided by the law.”