Etihad Airways PJSC sealed a 1.76 billion euro ($2.4 billion) agreement to buy 49% stake in Alitalia SpA, handing the Gulf carrier headway into one of the biggest travel markets in Europe and giving a new lease of life to Italy’s ailing former flagship-airline.
Etihad will pump 560 million euros into Alitalia, while current core owners have given nod to a 300 million-euro capital hike and Italian lenders will provide the same amount in new loans. About 598 million euros of short- and medium-term loans will be reorganized. The Italian firm will strive to return to profitability by 2017, said James Hogan, the firm’s chief executive officer.
The agreement, which ends months of negotiations between carriers, lenders and unions over issues of debt and staff layoffs, sees Alitalia secure its future after Air France-KLM Group withdrew from bailout plan arranged by the Italian government last year.
The fresh capital input will make it possible for Alitalia to spend in new long-haul flights from Rome and Milan, the two airlines said.
“With the right level of capitalization and a strong, strategic business plan, we have confidence the airline can be turned around and repositioned as a premium global airline once again. To me, the sexiest airline in Europe should be Alitalia,” Hogan is quoted by Bloomberg as saying.
Hogan is embracing an approach of taking up minority stakes around the globe, building an international network that will help sustain traffic via Etihad’s Abu Dhabi-based hub.
Although ownership restrictions mean Etihad does not enjoy absolute control of the airlines, the bought holdings gives it influence to boost management and strategy.
Alitalia CEO Gabriele Del Torchio termed the news as a “great result,” according to ABCNews.
Del Torchio recognized the deal would result in job cuts, but said staff would be offered opportunities in Abu Dhabi.
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