Dubai: Etihad Airways said on Saturday it’s in talks with Alitalia, the ailing Italian airline that’s seeking a new international partner after shareholder Air France-KLM Group said it won’t inject fresh funds.

“Etihad Airways is in discussions with Alitalia,” the Abu Dhabi carrier told Gulf News in a statement. “We have no further comment at this time.”

The carrier is reportedly involved in discussions that could see it take up to a 49 per cent stake in Alitalia and make a capital injection as high as €350 million.

A majority stake in cash-strapped Italian carrier, Alitalia, will give Etihad access to one of the most important international traffic markets in Europe feeding more eastbound passengers through its Abu Dhabi hub, aviation experts say.

An equity stake could give Etihad access to European-US open skies agreement through the Alitalia network. However, John Strickland, Director of UK-based aviation advisory JLS Consultants, told Gulf News in an emailed statement that Etihad will have to weigh up the realities of Alitalia’s weaknesses against its strategy to improve access to the Italian market.

The Italian carrier has been searching for a new partner after Air France-KLM let its shares dilute down to around seven per cent from 25 per cent after it did not to take part in a €300 million capital increase.

Alitalia subsequently raised €225 million in capital from other shareholders and credits and will receive a €75 million investment from Poste Italiane SpA.

Alitalia’s creditors, UniCredit SpA and Intesa Sanpaolo SpA, are reportedly providing a further €200 million in new credit lines.

The combined €500 million in new funds will likely secure Alitalia’s future at least for the next year but its long-term future could be dependent on whether or not it finds a partner.

Since privatising in 2008, Alitalia has struggled to compete with low-cost carriers as it faces increasing debts and losses. According to the Alitalia’s website, it operates 19 services from Rome Fiumicino airport to New York JFK. It could also direct traffic east to Abu Dhabi.

Strategic advantage

“Etihad will invest in any carrier where it perceives a strategic advantage is to be gained and particularly if the carrier is weak in eastbound markets,” David Bentley, Principal at UK-based aviation consultancy, Big Pond Aviation, told Gulf News in an emailed statement.

Etihad holds stakes in other European carriers including Aer Lingus, Darwin Airline, Air Serbia, and airberlin.

Bentley stated that it is likely Etihad will continue to take stakes in European carriers. Earlier this week Etihad announced a new codeshare agreement with Latvian carrier airBaltic. Bentley states that this could be the first step towards an eventual equity injection pointing out that, “airbaltic needs an equity injection just as Alitalia does.”

— With inputs from agencies