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11
Aug-2014

Alitalia & Etihad

News   /  

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.

Through the plans, the Italian national airline aims to invest in a comprehensive strategic business plan which will see new long-haul routes from Rome and Milan, a revitalised brand, and a greater focus on Italian tourism and trade promotion.

Etihad Airways’ investment of €560 million ($751.06mn) 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.

Etihad Airways will take a 49% shareholding in Alitalia, for an investment of €387.5 million (519.71mn). Its total investment also includes €112.5 million (150.88mn) to acquire a 75% interest in Alitalia Loyalty Spa, which operates MilleMiglia, the airline’s frequent flier programme, and the purchase by Etihad Airways of five pairs of slots at London’s Heathrow Airport valued at €60 million ($80.47mn). 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 UAE airline’s president and chief executive officer James Hogan noted: “For Etihad Airways, this is a strategic, long-term commercial investment. On completion, we are committed, with the other shareholders, to build a reinvigorated Alitalia as a competitive, sustainable and profitable business that can operate successfully in the global air travel market.”

“Ultimately it has to work as a business and the goal is for sustainable profitability from 2017,” he added.

While maintaining the relevance of short-haul routes, the proposed network plan focuses on the profitable growth of long-haul flying from both Rome Fiumicino and Milan Malpensa. This will include flights to new destinations, increased frequency in certain existing markets and an enhanced network to Abu Dhabi to capitalise on growing traffic between Italy and the UAE, and provide Alitalia’s passengers with connectivity to Etihad Airways’ global network.

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.

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.

Rome Fiumicino will emerge as a larger European intercontinental hub, with up to five new routes over the next four years, while long-haul flights from Milan Malpensa will more than double to 25 flights a week by 2018.

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