Airline Darwinism: Eithad, Alitalia reach breakthrough in negotiations
The airline confirmed that it would forward a letter to Alitalia detailing the conditions and the criteria for the equity investment.
Etihad Airways on Sunday said it is pressing ahead with a plan for an equity investment in the struggling Italian carrier Alitalia.
The airline, which has been in negotiations with the loss-making Italian carrier for almost a year, confirmed that it would forward a letter to Alitalia detailing the conditions and the criteria for the equity investment.
“The Italian government appreciates the strategic importance of this transaction and looks favourably at the Etihad Airways — Alitalia partnership,” the Abu Dhabi based carrier said in a statement.
Upon confirmation by the Board of Alitalia and its stakeholders of their acceptance of these terms, the airlines will proceed to final documentation in order to complete the proposed transaction, in line with EU and other regulatory requirements, Etihad said.
The statement, however, did not disclose details of the proposed transaction and the size of the stake.
“We are delighted to be able to move forward with this process and look forward to the successful conclusion of the proposed transaction with Alitalia,” said James Hogan, president and chief executive officer of Etihad Airways.
Hogan said an equity investment in Alitalia would be beneficial not only for the both airlines, but, “more importantly, it will give more choice and broader travel opportunities to business and leisure travellers into and out of Italy.”
Describing the deal as an excellent outcome for Alitalia, Gabriele Del Torchio, chief executive officer of Alitalia, said the investment would provide financial stability and confirms Alitalia’s key strategic role as an infrastructure player in the travel and tourism industry in Italy for long-term growth.
Roberto Colaninno, president of Alitalia, said: “We are delighted to move forward with Etihad Airways providing Alitalia with an ideal strategic partner enhancing the Company’s long term growth perspectives.”
Etihad, one of the fastest growing airlines in the world, has been holding talks with Alitalia since the start of the year. But the prospect of large job cuts at Alitalia and the airline’s debt of at least €800 million have been major hurdles in the talks. The struggling Italian carrier was kept afloat by a government-engineered €500 million-rescue package in 2013. The latest acquisition move by Etihad comes in the wake of it increasing its stake in Virgin Australia to more than 21 per cent last month.
Founded in 2003, the Abu Dhabi government-owned airline has been building up a network of minority stakes in airlines across the world to accelerate its growth,.
Currently Etihad also has holdings in airberlin, Air Lingus, and Air Serbia and Jet Airways of India. It is seeking regulatory approval to invest in Swiss regional carrier Darwin Airline.