New UAE-Italy ties after €560m deal between Etihad Airways and Alitalia

Abu Dhabi’s Al Qudra Holding last week bought an Italian resort in Catania, Sicily for €140 million.

Al Qudra bought a resort in Sicily, above, a day before the Etihad-Alitalia deal was signed. Matthew Williams-Ellis / Robert Harding World Imagery / Corbis
Powered by automated translation

The Etihad Airways deal with Alitalia is expected to pave the way for further investment in trade and tourism between Italy and the UAE, according to the Italian ambassador.

On Friday, Etihad took a 49 per cent stake in the debt-laden carrier in return for a €560 million (Dh2.75 billion) investment in an overall deal worth more than €1.75bn that will involve a three-year rebuilding exercise and rebranding of Italy's national airline.

The tie-up, which will increase the number of connections between the two countries and shift some Alitalia staff to Abu Dhabi, has made more deals likely.

Abu Dhabi’s Al Qudra Holding last week bought an Italian resort in Catania, Sicily for €140 million.

“A day before the signing of the Alitalia-Etihad agreement, Al Qudra bought a very important resort in Sicily – the Perla Ionica Resort,” said Giorgio Starace, Italy’s ambassador to the UAE. “It is interesting to see that in the plans that Etihad gave it is talking of establishing flights to other Italian cities; one of them is to Catania. This is very much linked. This is very important.”

Under the deal, Al Qudra will buy and refurbish the Perla Ionica, which will then be operated by Hilton, Mr Starace said. Al Qudra, an Abu Dhabi-based strategic investor, could not be reached for comment.

Mr Starace told The National last month that bilateral trade between Italy and the UAE was likely to grow by up to 15 per cent this year, boosted by demand for industrial machinery in the infrastructure sector in the UAE.

Trade last year between the countries was €6.9bn, according to figures from the Italian embassy in Abu Dhabi. About 80 per cent of that trade consisted of exports from Italy to the Emirates.

The embassy said that two-way trade rose 5.1 per cent last year and was up 56 per cent since 2010.

The biggest component of the southbound flow was jewellery, at €1.25bn. In the northbound direction, boats led at €575 million, while crude oil exports from the UAE to Italy were worth €202m. Trade growth is expected to come from the agriculture and food sector. Demand for Italian companies and machinery is high in the construction sector.

“Tourism will also go through an important boost in both ways. In one month, we issued more that 10,000 visas. It was a record,” said Mr Starace.

Etihad is keen to tap demand for travel from the more than 10,000 Italian citizens and 300 Italian companies that are based in the Emirates. It last month began daily flights to Rome, adding to its existing Milan service. Emirates Airline flies to Rome, Venice and Milan.

Mr Starace added that the collaboration between the two countries will also benefit from the link-up between next year’s Expo Milan and the Dubai Expo in 2020.

“Alitalia and Etihad are the official sponsors of Expo Milan 2015. Together, they will have a joint pavilion. The presence of the Italian companies in the UAE will increase, and the presence of UAE companies in the Italian market will also increase,” said Mr Starace.

“You can imagine the cohesive corporation that we have in front of us … We are building something important for the future of relations of these countries.”

The airline deal will result in the loss of 2,000 jobs at Alitalia, but some staff will be re-employed in Abu Dhabi.

“I don’t think all of them will relocate to Abu Dhabi, but surely an important portion [will be],” said Mr Starace. “The UAE is close to Italy – in terms of distance – and it’s a place that is more and more known by Italians.”

selgazzar@thenational.ae

Follow The National's Business section on Twitter