Doha: Etihad Airways is moving forward on the much talked about deal to take an equity stake in troubled Italian carrier Alitalia, according to a statement from the Abu Dhabi airline.
On Sunday, the airline said it will forward a letter detailing the conditions and criteria to the board of Alitalia and its stakeholders for it to make an equity investment.
“We are delighted to be able to move forward with this process and look forward to the successful conclusion of the proposed transaction with Alitalia,” stated James Hogan, Etihad Airways president and chief executive.
Etihad Airways and Alitalia have been engaged in equity investment talks for several months. However, it has been reported that the two airlines have so far been unable to agree on the final terms.
The biggest disagreement has reportedly been over potential layoffs with Etihad looking to stem the airlines losses and over who would handle the bulk of the Italian carrier’s debt.
In February, the two airlines announced during the former Italian Prime Minister Enrico Letta’s visit to the UAE that they had set a 30 day deadline to finalise the deal. Whilst the deadline passed the carriers reportedly continued to negotiate on the potential equity stake investment.
“An equity stake investment in Alitalia will be beneficial not only for the both airlines, but, more importantly, it will more choice and broader travel opportunities to business and leisure travellers into and out Italy,” stated Gabriele Del, Alitalia chief executive on Sunday.
Etihad is reportedly considering up to a 49 per cent stake and €300 million (Dh1.5 billion) cash injection into the unprofitable Alitalia. Etihad holds minority stakes in seven carriers including four European carriers. It holds an influential stake in all but one of the carriers.
Sunday’s announcement is likely to fuel tensions among rival carriers that have long objected that Etihad and the other two major Gulf carriers, Qatar Airways and Emirates, operate on an uneven playing field. Earlier this month, it was revealed by the Australian Financial Review that Etihad has received a $3 billion (Dh11.01 billion) long-term interest free loan from the Abu Dhabi government, its sole stakeholder, which does not requirement repayments until 2027.
Any deal for Etihad to take a stake in Alitalia is also likely to come under scrutiny by the European Union. Last month, the European Commission said it was looking into foreign holdings in European carriers, including Etihad’s stake in Air Berlin.
