Abu Dhabi’s state-owned Etihad Airways says it has agreed terms and conditions to buy just under half of Italy’s loss-making flagship airline
A tie-up would give Alitalia a financial life-line, as it is expected to run out of money by August.
Cash-rich Etihad will invest 1.25 billion euros over the next four years according to Italy’s Transport Minister Maurizio Lupi. For that it will get a 49 percent stake in one of Europe’s most troubled airlines and access to the region’s fourth-largest travel market.
Alitalia carried nearly 24 million passengers in 2013 – twice as many as Etihad – but the Italian company lost an estimated 175 million euros, while its soon-to-be partner made more than 45 million euros profit.
The two carriers have been in talks since December, but a deal has been elusive.
The sticking point has been Italy’s reluctance to accept Etihad’s conditions, which include over 2,200 job cuts and a restructuring of Alitalia’s debt.
But Italy’s government – which considers the airline a strategic national asset – and the trade unions now have little choice but to accept Etihad’s terms because no one else is prepared to take on an airline that has rarely turned a profit in its 68-year history, having to be repeatedly bailed out.
Transport Minister Maurizio Lupi said on Wednesday that the two airlines had met with Alitalia’s creditors, which include Italy’s two largest banks Intesa Sanpaolo and UniCredit, on Tuesday, adding that “decisive steps forward” had been made.
“It’s increasingly clear that this marriage should happen because it’s obvious to all that we are dealing with a strong industrial investment that will offer our airline concrete growth prospects,” the minister said in a statement. “I’m confident that this operation will come to a good end.”
He added that a meeting with unions and the labour minister would happen soon to discuss the question of layoffs.
Intesa Sanpaolo, which is a key Alitalia shareholder as well as a creditor, is convinced a deal on debt restructuring will be reached, hopefully by the end of July, the chairman of the bank’s management board Gianmaria Gros Pietro said on Tuesday.
Gros Pietro said July 31 was the date set by Etihad to conclude the deal.
Options under discussion include the banks writing off one third of the debt and converting the remainder into shares in Alitalia.
Etihad – which has utilised its strategic global location and government support to draw passengers away from traditional hubs in Europe and Asia to the Middle East – already has strategic stakes in Germany’s Air Berlin and Ireland’s Aer Lingus.