Etihad's "biggest investment" in Alitalia is going ahead

Etihad has confirmed it has reached agreement with AlItalia to buy 49% of the troubled airline.
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When it goes ahead, it will be the biggest investment that the Abu Dhabi airline has made in a foreign airline.


No details have yet been released and a spokesman for Etihad said: “The airlines will now move to finalise the transactional documents, that will include the agreed upon conditions, as soon as possible. The conclusion of the investment is subject to final regulatory approvals."


Italian Infrastructure Minister Maurizio Lupi was quoted earlier this month as saying that Etihad was looking to invest $762 million initially and was pledging a further $940 million in the airline over the next four years.


Arabian Aerospace has reported previously that Etihad had hit a stumbling block over its conditions which included cutting Alitalia's workforce. According to Lupi, there could be a reduction of 2,251 people to 11,470.

Analyst Saj Ahmad commented: “Considering that there were no other investors stepping forward to want to invest in or rescue Alitalia, it was always inevitable that some sort of deal would eventually be struck with Etihad who want to aggressively expand their portfolio and their European presence. Alitalia's weakness represents a good vehicle for them to do both although it's unclear how receptive Alitalia will be to change.
 
“While details of job cuts, routes being dropped and management changes still have to be worked out, it is evident that the 49% stake that Etihad will acquire will come with strict conditions attached to it for Alitalia to absorb as the price for saving their skin.”
 
Ahmad added: “The big challenge now is to get past the initial regulatory hurdles and sign off on this deal - then comes the question of what Etihad actually does and what Alitalia allows to happen to change this loss making European dinosaur something worthy of Etihad's financial investment.”