Etihad Airways attempts to save debt ridden Alitalia in deal

Etihad Airline Makes Australian Debut
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ETIHAD Airways, Abu Dhabi’s state owned airline, said yesterday it had agreed a deal in principle to buy a 49 per cent stake of troubled Italian carrier Alitalia.

Alitalia, Italy’s flag-carrier airline, has rarely made a profit in its 68-year history. It was propped up with large state subsidies before being privatised in 2008, and now had debts of around £656m.

No financial details were disclosed on Wednesday, but Italian transport minister Maurizio Lupi said Etihad was prepared to invest up to €1.25bn (£1bn) over the next four years, as Etihad looks to try to rejuvenate the loss-making airline.

The airlines have said they will wrap up the deal as soon as possible but will face EU regulatory approval before that can be achieved. Etihad Airways already owns a 29 per cent shareholding in Air Berlin that the European Commission inquired into in April this year. The deal could save Alitalia and strengthen Etihad’s ambitious strategy to unite airlines in Europe and Asia.

The two companies have been in talks since December, but Alitalia has been hesitant to cut jobs as a part of the deal. Alitalia requires a strong partnership with Etihad after talks with Air France-KLM stalled over debts and potential cuts in the airline. But Alitalia said this month that the Etihad investment was “an excellent outcome” and would “provide financial stability”.