Italian carrier's board approves proposal for 49% share buy-out.The board of directors of Italian carrier Alitalia has given the go-ahead signal to the proposal presented by Abu Dhabi's Etihad Airways for an equity partnership between the two national carriers.
It has given the mandate to negotiate the contract to president and chief executive officer Gabriele Del Torchio, paving the way for Etihad Airways to proceed with its share buy-out plan.
Etihad Airways last month had submitted its plan to buy out 49 per cent of the Italian flag carrier, which may land in a financial crisis in August if a massive capital injection is not done.
The issues, which have to be resolved between the two airlines, include Alitalia’s heavy debts and a need of cutting 2,200 jobs out of a total of 12,800 as part of the deal.There are other issues which need to be resolved, as officials in northern Italy have also raised concerns over the potential impact on Milan’s Malpensa airport, which they fear could be seriously penalised by the deal.
Detailed talks on all those issues were set to continue despite the green light.Del Torchio, quoted by Italian news agency Ansa, said after the talks that negotiations with banks on Alitalia’s debt burden were “continuing in the right direction”.
“It takes time, since it involves a large sum. But everyone clearly wants to reach a solution with Etihad Airways.”On the jobs front, new talks between Alitalia management and unions were set for tomorrow, Italian media said.
Italian Transport Minister Maurizio Lupi warned earlier last week that negotiations would have to be wrapped up by mid-July on the tie-up with Etihad Airways, which he said was prepared to invest up to €1.25 billion in Alitalia by 2018.
Meanwhile, the board of directors also okayed provisions and asset writedowns for €233 million, in preparation for future strategies. Gaining an Alitalia stake would add to a half-dozen holdings that Etihad Airways owns from Serbia to the Seychelles and Australia.
Etihad Airways seeks to funnel more traffic through its Abu Dhabi hub, and the Italian market is attractive to airlines because of a large population and location in the heart of Europe.
Alitalia has sought a new major shareholder after Air France-KLM Group bowed out of a rescue package brokered under Italy’s supervision to keep the chronically-unprofitable airline afloat. Air France said it wouldn’t participate in a capital increase, ceding its role as the largest shareholder.
Etihad Airways said this month that it set specific conditions for an investment, with approval needed from the Italian company before detailed talks begin.
After buying stakes in airberlin, Aer Lingus, Air Serbia and Jet Airways, and seeking regulatory approval to invest in Swiss-based regional carrier Darwin Airline, Alitalia deal will give Etihad Airways a greater presence in one of the leading European markets.
Etihad Airways will have access to 103 destinations, of which 26 in Italy and 77 in the rest of the world, 186 routes. The airline flies more than 4,700 weekly flights and carried 23.99 million passengers in 2013.
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