Etihad rescues crippled Alitalia with deal to take 49%

Tags: News
Emirates airline Etihad Airways tied up a deal to rescue debt-laden carrier Alitalia on today by taking 49.0 per cent of the Italian company.

The two groups gave no details of the value of the deal or of any conditions, but two key issues are huge debt and overstaffing at Alitalia which has lurched from crisis to crisis for years.

The deal, concluding tough negotiations which began at the end of last year, means that Etihad Airways is in effect rescuing Alitalia, playing a role which Air France once considered but then dropped because of the scale of the problems.

The agreement also marks a big step in the rise of Etihad Airways a young and rapidly growing company, which becomes a key shareholder in one of the old names of European aviation, and increases its reach into European markets and global routes.

Alitalia is now in the hands of private shareholders, but has its roots in the days when most European countries had their own state-owned airlines.

In recent years it has lurched from crisis to crisis, skirting bankruptcy, and beset by restructuring efforts and conflicts with staff.

The debt and staff cuts are believed to have been central sticking points in the negotiations.

Alitalia employs 12,800 and it is believed that about 2,200 jobs will have to be axed.

Etihad Airways has expanded rapidly in recent years, largely on a rise of air travel in the Gulf region of the Middle East.

In a joint statement, which provided no details, the two airlines said they had agreed the "terms and conditions of a proposed transaction whereby Etihad Airways will acquire a 49 percent equity stake in Alitalia."

They said they would tie up the deal as soon as possible subject to approval from regulators.

The chief executive at Alitalia, Gabriele del Torchio, said early in June that Alitalia would have to face a "complex, exhausting and painful" restructuring, but that there was "no alternative". And he mentioned 2,200 job cuts.

Italian Transport Minister, Maurizio Lupi, in a warning on Monday to Italian trade unions which are strongly opposed to job cuts, said that Alitalia had but two options: "the plan for recovery with Etihad, or the abyss."

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.
Image CAPTCHA
Copy the characters (respecting upper/lower case) from the image.

EDITORIAL OF THE DAY

  • To die with dignity is an inalienable part of right to life

    The death of Aruna Shanbaug this week has again brought the long-standing euthanasia debate to life.

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

TODAY'S COLUMNS

Urs Schoettli

China looks to India for balance

Almost a third of the total world population lives in ...

Zehra Naqvi

Love and its stories

People must have bread. They can live without stories. No, Hameeda, ...

Dharmendra Khandal

Tiger in urban landscape

Ranthambhore is in a no-win situation. Just a few days ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture