Altialia has begun bankruptcy proceedings following its failure to gain pay concessions from its workforce and a fresh capital injection from Abu Dhabi-based Etihad Airways among others. In a statement released Tuesday, the Italian flag carrier said its board of directors unanimously voted to enter “extraordinary administration” following the company’s shareholders’ meeting.

“The negative vote has determined the inability to implement the relaunch and restructuring of the company,” the statement read. It marks the second time Alitalia has declared bankruptcy since 2008.

“Italian shareholders and Etihad, based on the strong potential growth of the company, and on an industrial plan that included a structural cost reduction of which two-thirds were not related to labor costs, were committed to recapitalize and finance the plan with €2 billion,” said Alitalia. Most of that sum would have come from Etihad, which owns 49 percent of Alitalia.

However, the Abu Dhabi-based airline would not commit the funding unless Alitalia managed to convince its workforce to accept deep pay cuts and layoffs. After management initially presented a plan to lay off 2,000 employees and institute pay cuts of as much as 30 percent over three years, a deal reached with unions on April 14 would have cut salaries by only 8 percent and reduced the number of job cuts to some 1,700. But workers rejected the plan in a vote tallied on April 24.

In a statement of its own, Etihad expressed disappointment that its €1.4 billion investment it committed to Alitalia in 2014 proved fruitless. “We have done all we could to support Alitalia, as a minority shareholder, but it is clear this business requires fundamental and far-reaching restructuring to survive and grow in future," said Etihad Aviation Group CEO James Hogan. "Without the support of all stakeholders for that restructuring, we are not prepared to continue to invest."

Although Hogan added that Etihad's involvement delivered "significant improvements" to the Italian airline's performance, increased compeititon from low-fare carriers and the effects of terrorism on tourism demand resulted in a need for further restructuring efforts.

Notwithstanding its pledge not to inject further funds into Alitalia, Eithad said it considers Italy an important market and that it would continue to work with the Italian flag carrier as a "commercial partner."