The long-delayed deal for Middle Eastern airline Etihad to buy almost half of Alitalia has finally been signed after eight months of negotiations.
Etihad, owned by the emirate of Abu Dhabi, will pour 560 million euros into the lossmaking Italian flag carrier. Another 300 million euros will come from new shares.
The turnaround effort will involve cutting thousands of jobs, but without this deal Alitalia was heading for bankruptcy.
The final agreement was held up by tough wrangling over jobs and restructuring of Alitalia’s debt.
Etihad says it plans to make Alitalia profitable again in three years.
Etihad Chief Executive James Hogan said Alitalia, which offers access to Europe’s fourth-largest travel market and flies 25 million passengers a year, was a good fit for his airline.
“There are no more exciting destinations in Europe than Italy,” Hogan said, adding he would seek to remake the Alitalia brand. “To me, the sexiest airline in Europe is Alitalia.”
The Gulf carrier already has stakes in Air Berlin and Aer Lingus and the latest deal will boost its efforts to expand in Europe.
However, Hogan said Alitalia was a financially poor business and it would take time to turn it around.
“There’s no quick fix… Alitalia is going nowhere, but the way Alitalia is going to look in the future is very different,” Hogan said.
The marriage with Etihad should bring Alitalia money to invest in more profitable long-haul routes and make it less reliant on domestic and regional services where it has struggled to compete against low-cost airlines and high-speed trains.