Etihad Airways €500m deal with Alitalia expected
The final agreement on Etihad Airways buying a stake in Alitalia is expected tomorrow, Friday, after a positive meeting between Italian government officials and the Abu Dhabi carrier’s chief executive.
The Italian transport minister Maurizio Lupi and Graziano Del Rio, the chief of staff to the country’s prime minister, yesterday met with James Hogan to finalise the deal in which Etihad is expected to take a 49 per cent stake in the debt-laden airline.
The prime minister Matteo Renzi’s office said that the meeting had concluded “positively”.
Mr Lupi had already indicated that the deal would be completed today, Reuters reported. Alitalia’s board of directors gave its backing to the deal in June.
Etihad could initially invest about €500 million (Dh2.45 billion) into the troubled airline, with a possible future injection of up to €660m.
Negotiations have centred on cost-cutting measures, with layoffs and how to deal with the carrier’s total debt of about €800m as major sticking points.
Alitalia has made an annual profit only a few times in its 68-year history and received numerous state handouts before being privatised in 2008. It was kept afloat last year by a government-engineered €500m rescue package.
Alitalia shareholders last week approved a share issue of up to €250m to keep the airline flying while the deal with Etihad was being finalised. Its creditors also agreed to share the burden of the debt according to bank Unicredit.
Etihad has adopted a similar turnaround strategy when it took equity stakes in Air Serbia and Air Seychelles.
The deal could also pave the way for Etihad and Italy’s post office operator Poste Italiane, an Alitalia shareholder, to establish a partnership in areas including ticket sales, travel insurance and e-commerce, Reuters reported yesterday.
Poste Italiane said last week it would invest €70m in Alitalia, its second cash injection into the airline in less than a year.
Etihad is building up its route network through “equity alliances”, in which it invests in carriers that help it to expand its global reach in strategically important regions.
Last year Etihad grew its equity alliance to seven, comprising Air Seychelles, airberlin, Virgin Australia, Air Serbia, Ireland’s Aer Lingus, India’s Jet Airways and Etihad Regional – formerly known as Darwin Airline.
* with agencies
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Published: August 7, 2014 04:00 AM