Italy’s Alitalia is to enter government-supervised administration proceedings, which could result in the liquidation or sale of the airline.
Etihad Aviation Group (EAG), which owns a minority stake in Alitalia, said it was disappointed in the outcome after its significant investment in the company over the past three years.
“We have done all we could to support Alitalia as a minority shareholder, but it’s clear this business requires fundamental and far-reaching restructuring to survive and grow in the future,” James Hogan, the president and chief executive of EAG, said in a statement on Tuesday.
Etihad and Italian shareholders were ready to invest €2 billion (Dh8.01bn) in the latest attempt to restructure the loss-making airline, although the deal was subject to an agreement with trade unions.
However, at the end of last month, Alitalia employees voted against the rescue plan, pushing the Italian carrier on Tuesday to request to be put into extraordinary administration.
“Without the support of all stakeholders for that restructuring, we aren’t prepared to continue to invest,” Mr Hogan said.
Etihad, and other shareholders, had initially invested €1.72bn in 2014 when it took on a 49 per cent stake. Since then Etihad has supported Alitalia’s turnaround efforts including a rebranding and investing in training and technology.
The 2017-19 business strategy for the carrier included cost cuts of €1bn, targeting a 30 per cent rise in revenue, plans to increase transatlantic flights and a reduction in its fleet.
Etihad said new marketplace challenges, including more competition as well as the impact of increased terrorism threats on tourism, meant “further, deeper change was required”. Budget airlines account for 47 per cent of the Italian market.
“We’re disappointed that despite our significant investments in Alitalia, alongside those of other shareholders, the airline was unable to proceed in its current form.”
Now Alitalia will be in the hands of the Italian government, which will appoint a commissioner to decide if there will be a bailout or bankruptcy of the company. The government has extended the airline a bridging loan of about €400 million to keep it flying in the interim.
“All guests with Etihad bookings on Alitalia, or vice versa, should proceed with their travel plans as normal,” Etihad said.
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