Etihad have add to its equity alliance strategy by acquiring a 49 per cent stake in Italian carrier Alitalia, it was confirmed on Saturday.
In a deal valued just under €1.8 billion, the Abu Dhabi airline has pledged to invest €560 million, with the remainder coming from restructuring of previous debt, Italian bank loans and existing Alitalia shareholders.
The job of rescuing Alitalia, one of Europe’s top airlines, will be huge considering the carrier amassed over €840 million in net losses since its privatisation in 2009.
Speaking in Rome on Saturday, Etihad CEO James Hogan described the task as a “three-year rebuilding exercise.” The plan will be to redefine Alitalia’s international standing by expanding its long-haul fleet by 32 per cent. Likewise, according to Hogan, “the current style of Alitalia is outdated, so we’ve actually been working with the team on a new livery, a new service proposition and new uniforms.”
The deal comes after months of negotiations between the two parties concerning the effects the acquisition will have on Alitalia’s employees. However, fearing that a collapse in talks may bankrupt Alitalia, threatening 10,000 jobs, Italian trade unions finally accepted a negotiated proposal to cut 1,635 personnel.
One person expected to stand down, however, will be Alitalia CEO Gabriele Del Torchio. In an interview published on Saturday he explained that he was bought in to secure an alliance which would bring the struggling carrier into profits and having achieved this, he is ready to move on.
The acquisition brings Etihad’s equity alliance to eight airlines, including India’s Jet Airways, Air Serbia and low-cost Air Berlin. Asked on Saturday whether Etihad were perhaps looking to extend their wings to Philippines Airlines, having recently signed a strategic partnership, or even troubled Malaysia Airlines, Hogan said that such proposals hasn’t yet been considered, adding that it is unlikely that any further acquisitions will be made in 2014.