Italian Prime Minister Silvio Berlusconi voiced support for Alitalia's hotly-contested industrial plan on Friday but asked the airline to hold fire on job cuts ahead of tough union negotiations.

State-controlled Alitalia plans to shed 2,700 jobs, 1,200 of which through outsourcing, over the next three years as part of a do-or-die rescue plan. Unions are furiously battling the cuts.

"The prime minister repeated that the actions outlined in the industrial plan are valid and necessary," Berlusconi's office said in a statement after the prime minister met Alitalia CEO Francesco Mengozzi.

The statement added that there would be government-mediated talks between Alitalia and its unions on December 29 and said Berlusconi had asked Mengozzi to freeze any action on jobs pending those talks.

It added that Alitalia should call a board meeting after the talks to re-evaluate the social impact of its plan in light of the negotiations.

Alitalia, which is forecasting an operating loss of more than EUR400 million (USD$493 million) this year, says its plan will pull it back into profit in 2005.

But it faces a bumpy ride as it tries to impose job cuts. On Wednesday more than 1,000 Alitalia staff at Rome's Fiumicino Airport staged an unannounced protest over the plan that ended in violence and forced the airline to cancel 80 flights.

"The prime minister invited all parties to a responsible cooling of tensions for the greater interest of customers," said the statement from Berlusconi's office.

(Reuters)