Gulf’s Etihad gets 49% stake in struggling Alitalia
Aug. 11, 2014, Rome, Italy - Fast-growing Etihad Airways took effective control of Italy's loss-making national carrier Alitalia on Friday, injecting 560 million euros ($750 million) in a deal that will see the Gulf airline gain access to one of Europe's major markets.
August 11, 2014 By The Associated Press
Etihad, which is buying a 49 per cent stake in the Rome-based
carrier, said Friday it will restructure Alitalia and even laid out the
hope of returning it to profitability by 2017. The overall 1.76
billion-euro deal also involves 598 million of debt restructuring and
300 million from Alitalia's wide array of smaller shareholders.
Etihad Airways CEO James Hogan announced
the three-year plan to completely reboot the Alitalia brand at a press
conference, saying it was a strong airline but "a poor business
financially" that needed to be turned around.
"If we didn't believe Alitalia could
restructure and win we wouldn't be here," he said alongside his
counterpart, Gabriele Del Torchio. "The sexiest airline in Europe
should be Alitalia."
The two signed the deal
making Etihad the single largest shareholder in Alitalia after months of
negotiations over debt restructuring, proposed job cuts and other
issues that sparked fierce opposition from Italian unions. Airline
workers have staged wildcat strikes at Rome's main airport this week to
protest the deal.
But Alitalia announced earlier Friday that it had reached agreement with all of Italy's main unions to back the deal.
"This is a great result," Del Torchio said. "It means that everyone believes in this great adventure."
Del Torchio acknowledged there would be job cuts, but said employees would be offered work in Abu Dhabi.
The deal adds one of
Europe's most recognizable aviation brands to Etihad's growing
collection of foreign investments that also includes AirBerlin, Air
Seychelles, Virgin Australia, Aer Lingus, Air Serbia and Jet Airways.
Etihad is owned by the government of Abu Dhabi, the oil-rich capital of the United Arab Emirates.
Hogan said the renewed airline would be
able to capitalize on Etihad's growing conglomerate to reduce overhead
and expand reach. Plans call for beefing up Rome's Leonardo da Vinci
airport as a hub, increasing Alitalia's wide-body fleet by a third,
adding more long-haul routes — especially to the Gulf — and trimming
back less-performing shorter routes.
The aim, he said, was to take advantage
of Italy as a tourist and trade destination while giving Italian
passengers greater options for travelling abroad.
Alitalia, which reportedly
loses nearly 2 million euros a day, has not been publicly traded since
it was taken over by a consortium of Italian entrepreneurs five years
The deal, which is subject to regulatory approval, is expected to be completed Dec. 31.