Commercial

Etihad, Alitalia Agree to $2 Billion Deal

By Woodrow Bellamy III  | August 8, 2014
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[Avionics Today 8-08-2014] Etihad Airways agreed to a $2 billion deal that will give it a 49 percent share of Alitalia. The Middle Eastern carrier is looking to return the struggling Italian airline to profitability within two years with a robust investment plan.
 
 
 
(from left to right) Etihad Airways Chief Financial Officer James Rigney, Alitalia Chairman Roberto Colaninno, Etihad Airways President and Chief Executive Officer James Hogan, and Alitalia Chief Executive Officer Gabriele Del Torchio mark the official signing of the investment deal in Rome, Italy. Photo, courtesy of Etihad Airways.
 
“We believe in Alitalia. It is great brand with enormous potential,” said James Hogan, president and CEO of Etihad Airways. “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.” 
 
Under the new agreement, Etihad will invest $751 million directly into Alitalia,  through a combination of equity injections, asset purchases and other financing facilities and funding arrangements to re-structure the airline’s balance sheet, Hogan told reporters at a news conference in Rome announcing the new deal. 
 
Etihad’s plans to restore profitability at Alitalia include adding new long haul routes to the Middle East and other international destinations, along with increasing the airline’s wide-body fleet with modern fuel-efficient aircraft.
 
 While the purchase agreement is still subject to regulatory approval from the European Union, Italy’s Minister of Infrastructures and Transport Maurizio Lupi said he expects the deal to be finalized by the end of 2014. 
 
As a result of the Etihad deal, Air France KLM — which previously reduced its stake in Alitalia from 25 to 7.1 percent — will see its share in the airline further reduced. Etihad has been seeking to add Alitalia to its growing list of foreign investments, which includes AirBerlin, Air Seychelles, Virgin Australia, Aer Lingus, Air Serbia and Jet Airways.
 
“This is an excellent outcome for Alitalia. We have had to take some tough decisions in a very robust negotiation process but we have achieved the consensus we require to create the right shape and size for Alitalia in the future,” said Gabriele Del Torchio, CEO of Alitalia. “This investment will provide financial stability and enable us to position Alitalia, and the travel and tourism industry in Italy, for long-term growth.”
 
 
 

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