Alitalia, Etihad finalize €1.758-B investment deal

MANILA, Philippines - Etihad Airways and Alitalia today announced that they have signed an agreement that will result in a €1.758 billion 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 revitalised brand, and a greater focus on Italian tourism and trade promotion. Italian travellers will be able to benefit from a wider choice of destinations while new global connections will boost inbound tourism.

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, including Intesa San Paolo (€88m), Poste Italiane (€75m), UniCredit (€63.5m), Atlantia (€51m), IMMSI (€10m), Pirelli (€10m) and Gavio (€2.5m).

Additionally, up to €598 million in financial restructuring of short and medium term debt has been provided by financial institutions and existing bank shareholders. €300 million of new loan facilities have also been extended by Italian financial institutions.

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 programme, 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 Dec. 31.

Completion of the equity investment remains subject to completion by Alitalia and its key private and public stakeholders of certain conditions precedent and is also subject to final regulatory approvals.

Etihad Airways president and chief executive officer  James Hogan, said: “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.

“We believe in Alitalia. It is great brand with enormous potential. With the right level of capitalisation and a strong, strategic business plan, we have confidence the airline can be turned around and repositioned as a premium global airline once again.

“Alitalia is the perfect ambassador for Italy and all that it represents. As we revitalise the brand, the airline will increasingly embody all that we recognise as quintessentially Italian – the history, culture, food and fashion. It must be an airline of which Italians can be proud.

“However ultimately it has to work as a business and the goal is for sustainable profitability from 2017.”