São Paulo – Abu Dhabi’s Etihad Airways and Italy’s state-owned airline Alitalia have signed an agreement this Friday (8th) for the purchase of a 49% by the former in the latter, which is experiencing financial difficulties. The deal provides for a 560 million-euro investment by Etihad. Further measures will be implemented to rescue Alitalia from crisis and create new routes.
In a press statement, the two companies claim that in addition to a capital injection by the Arab airline, the agreement will lead to 300 million euros worth of investment by Alitalia’s current stakeholders, 300 million euros in loans from Italian banks and restructuring of the company’s 598 million euro debt.
Out of the investment to be made by Etihad, 387.5 million euros concern the purchase of a 49% stake in the company, 112.5 million concern the purchase of 75% of Alitalia’s mileage program and 60 million euros refer to the purchase of five pairs of slots, i.e., takeoff and landing permits, at London’s Heathrow Airport. The slots will be leased to Alitalia.
The deal involves a total sum of 1.758 billion euros. The deal is pending approval from regulatory authorities in Italy and the European Union. According to a press release from Etihad, the agreement should be completed by December 31st this year.
In the press statement, Etihad’s CEO and president James Hogan says the goal is to have Alitalia attain sustainable profit levels by 2017. “We believe in Alitalia. It is great a brand with enormous potential. With the right level of capitalisation and a strong, strategic business plan, we have confidence the airline can be turned around and repositioned as a premium global airline once again.”
Changes
According to the press release, as early as the European winter, late this year, the frequency of Alitalia’s flights from Rome to Abu Dhabi will be increased from five to daily flights. Direct flights will also connect Abu Dhabi and the Milan Malpensa Airport. Etihad already flies to these cities on a daily basis.
Beginning in the European summer 2015, Alitalia will start flying between Abu Dhabi and other Italian cities, including Venice, Catania and Bologna. From the Rome Airport, Alitalia will begin operating five new routes over the next four years, and Milan will have double the international departures per week by 2018. The long-range jet fleet should increase, and the regional jet fleet should be “readapted,” according to the statement, to match the new route plan.
The Italian news agency Ansa has reported that 2,000 Alitalia employees should be dismissed.
*Translated by Gabriel Pomerancblum
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