DHAKA: Etihad Airways is injecting €560 million and taking a 49 percent stake Italy’s debt ridden national carrier Alitalia after 12 months of negotiations.
The deal, finalised in Rome on Friday, gives Etihad access to Europe’s fourth largest travel market but also means that Alitalia will survive.
Etihad is spending €387.5 million on the equity stake, €60 million on buying five London Heathrow slots off Alitalia and a further €112.5 million to acquire 75 percent of Alitalia’s MileMiglia loyalty program.
The Heathrow slots will be leased back to Alitalia. The transaction is due to be completed on December 31, 2014.
Talks between the two airlines started last year but stalled due to disagreements over restructuring Alitalia’s nearly €1 billion debt and job cuts. Alitalia was bailed out last year by a €500 million government engineered rescue package.
The Italian airline had earlier tried to secure more capital from Air France-KLM, a shareholder, but a disagreement over debt restructuring led to the French-Dutch group allowing its 25 percent stake to be diluted to 7 percent.
‘We’ve put together a three-year plan to put the airline back to profitability,’ said James Hogan, Etihad Airways President and chief executive, in Rome on Friday, reports gulfnews.com.
BDST: 1610 HRS, AUG 09, 2014
