Etihad, Alitalia Finalize €1,758 Million Investment Deal
Etihad Airways and Alitalia have signed the transaction implementation agreement which will result in a €1,758 million ($2,357.79mn) investment to build a reinvigorated Alitalia as a competitive, sustainably profitable business.
The recapitalized Italian national airline will now be able to invest in a comprehensive strategic business plan which will see new long-haul routes from Rome and Milan, a revitalized brand, and a greater focus on Italian tourism and trade promotion.
Etihad Airways’ investment of €560 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. This is to be complemented by a further equity investment of €300 million from existing core Alitalia shareholders.
According to Etihad Airways President and Chief Executive Officer, James Hogan, this is a strategic, long-term commercial investment for Etihad.
“We believe in Alitalia. It is great brand with enormous potential. With the right level of capitalization and a strong, strategic business plan, we have confidence the airline can be turned around and repositioned as a premium global airline once again,” Mr. Hogan said.
Etihad Airways will take a 49 percent shareholding in Alitalia, for an investment of €387.5 million. Its total investment also includes €112.5 million to acquire a 75 percent interest in Alitalia Loyalty Spa, which operates MilleMiglia, the airline’s frequent flier program, and the purchase by Etihad Airways of five pairs of slots at London’s Heathrow Airport valued at €60 million. The slot pairs will be leased back to Alitalia on an arm’s length basis. The transaction is due to be completed on 31 December 2014. “The goal is for sustainable profitability from 2017,” Etihad’s president added.
Italian travelers will be able to benefit from a wider choice of destinations while new global connections will boost inbound tourism.
Starting from Winter 2014, Alitalia will increase frequency between Rome Fiumicino and Abu Dhabi from five per week to a daily service, and commence a new daily service between Milan Malpensa and Abu Dhabi. This flying will complement Etihad Airways’ existing daily services on these markets and open up a range of new connecting opportunities for passengers of both airlines.
From Summer 2015, Alitalia will also begin to implement connections between other Italian cities and Abu Dhabi, with plans for direct flights from markets such as Venice, Catania and Bologna.
Etihad Airways currently operates daily services from Abu Dhabi to Rome and Milan, which complement Alitalia’s five flights a week from Rome to Abu Dhabi. The two airlines also codeshare to a total of 31 other destinations.