Etihad invests $750 million in Alitalia
Etihad plans to restructure the Rome-based airline in hope of returning to “sustainable profitability” by 2017, according to a press release.
Abu Dhabi-based carrier Etihad Airways is investing $750 million in Italy’s national airline Alitalia, according to a press release.
The airline will buy 49% of shares in in Alitalia, making it a minor shareholder.
Etihad plans to restructure the Rome-based airline in hope of returning to “sustainable profitability” by 2017, according to the press release.
“Etihad Airways’ investment of €560 million [$750 million] will be provided through a combination of equity injections, asset purchases and other financing facilities and funding arrangements to re-structure the airline’s balance sheet” the statement read.
In a press conference in Rome, Etihad Airways CEO James Hogan announced the three-year plan to completely reboot the Alitalia, saying it was a strong airline but “a poor business financially” that needed to be revamped.
“Alitalia can succeed and it can grow again but it needs to build from solid foundations … our entire investment should be focused on supporting the implementation of the new business plan, which will see this goal come to fruition” Hogan is quoted in the press release.
"If we didn't believe Alitalia could restructure and win we wouldn't be here," he said alongside his Alitalia counterpart, Gabriele Del Torchio. "The sexiest airline in Europe should be Alitalia."
The deal was a product of months-long negotiations over debt restructuring, proposed job cuts and other matters that sparked criticism from Italian unions.
This deal marks another recognizable European carrier to Etihad’s foreign investment portfolio, which includes AirBerlin, Air Seychelles, Virgin Australia, Aer Lingus, Air Serbia and Jet Airways.
Hogan said the new airline would be able to capitalize on Etihad's growing conglomerate to reduce overhead and expand reach. Plans call for beefing up Rome's Leonardo da Vinci airport as a hub, adding more long-haul routes and trimming back less-performing shorter routes.
(With the Associated Press)
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