Italian defence industry group Finmeccanica said Monday it plans to cut 1,200 jobs from its Alenia Aeronautica aviation unit, or 10 percent of the division's workforce.

Another 1,000 employees would be temporarily laid off or transfered to other parts of the company, plus another 500 posts outsourced.

In July, after a results warning that sent its share price falling, Finmeccanica announced a company restructuring programme that would focus especially on Alenia Aeronautica, which employs around 12,000 people.

The company employs around 75,000 people overall.

In addition to the layoffs, the company announced targeted investments, with the possible developemnt of a new civilian aircraft in partnership with Russian plane-maker Sukhoi and the ramping up in production of the short-haul ATR, a joint venture between Finmeccanica and EADS.

Giuseppe Giordo, chief executive of Alenia Aeronautica, said the restructuring would reshape the company to face current challenges like slow world growth, cuts in defence budgets and increasing competition.

Unions called the plan harsh and demanded new proposals.

Finmeccanica's shares ended the day down 8.63 percent, but most of the loss had occurred before the announcement as investors were booking gains following a rally last week over speculation that General Electric and Alstom were interested in its rail activities.

The company's shares were also suffering from two executives stepping down after being implicated in the case where people were suspected of providing Italian Prime Minister Silvio Berlusconi with dozens of young women in 2008 and 2009 in order to win lucrative contracts, including with Finmeccanica.

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