Etihad Takes 49% Stake in Alitalia
Italian Flag Carrier to Undergo 3-Year Restructuring
Etihad Airways announced it has reached an agreement under which it will acquire 49% of Alitalia, the flag carrier of Italy, at a news conference.
Under the agreement, which is scheduled to close by the end of the year, Etihad is taking a 49% stake in the airline for €387.5 million as well as a €112.5 million stake to acquire 75% of Alitalia Loyalty Spa, the entity which operates MilleMiglia, the airline’s frequent flyer program. Etihad is also purchasing five pairs of slots at London Heathrow Airport for €60 million and will lease these back to Alitalia on an arm’s length basis.
The deal was signed by Alitalia and Etihad executives in Rome at a news conference on Friday.
Alitalia will now undergo a three-year restructuring plan with a goal of being profitable in 2017, according to Etihad CEO James Hogan. “Time for change is now,” he said at the news conference, adding that the airline now faces “tough decisions.” More long-haul jets and routes will be added, unprofitable routes will be cut, and the airline’s narrow-body fleet will be reduced, he said.
One of the major changes will be a reversal of the airline’s decision several years ago to dehub Milan.
Alitalia narrowly averted a strike with three of its unions, which threatened to keep its members home on Friday. A last minute agreement negotiated overnight kept the airline operating. The union called the Etihad deal “the only concrete alternative to guarantee a future for Alitalia, its employees and the entire national economy,” in a statement.
Etihad has made similar investments in seven airlines including Air Berlin, Air Serbia, Darwin Airline, and Aer Lingus, but its deal with Alitalia is its biggest yet. The deal requires regulatory approval by the EU.
(Photo: Accura Media Group)