It seems that Etihad was hell bend on grabbing Alitalia, with the airline confirming on Friday it is to purchase 49% of the ailing Italian Flag Carrier.
Etihad Boeing 777 – Image, GhettoIFE
Alitalia Airbus A321 – Image GhettoIFE
Etihad will invest €387.5 million to stave off Alitalia from bankruptcy, and will attempt to restructure the airline to return it to profitability. It will also purchase 75% of Alitalia Loyalty for €60million, and purchase fives pairs of slots at Heathrow and lease them back for €60 million
For its recovery, Alitalia will turn to its long haul network to boost routes and capacity out of Rome-Fiumicino and Milan-Malpensal to new destinations, as well as feeding into the Etihad hub in Abu Dhabi. This will involves Rome-FCO to Abu Dhabi going daily, and Milan to Abu Dhabi starting a new daily route. Other Italian cities will have a direct service to Abu Dhabi from Summer 2015, with Venice, Catania and Bologna to gain direct services
Eithad seems pleased with its purchase, with its CEO James Hogan stating:
“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.”
Alitalia are rather happy too, saying: with CEO Gabriele Del Torchio said:
“This is an excellent outcome for Alitalia. We have had to take some tough decisions in a very robust negotiation process but we have achieved the consensus we require to create the right shape and size for Alitalia in the future.
This investment will provide financial stability and enable us to position Alitalia, and the travel and tourism industry in Italy, for long-term growth.”
All being well, and subject to regulators and conditions on both sides, the 49% equity purchase is due to be completed by 31st December 2014.
For those with loyalty and frequent flyer miles in mind, Eithad will purchase 75% of Alitalia Loyalty, and allow cross earning and burning of miles on Altalila and Etihad metal, with full integration planned between the two programmes a later stage.
The real work will begin soon, and that will be extremely hard for Alitalita as cuts are made and the “synergies” between the two airlines can be exploited. However, there will be heavy cuts to make this happen and to make the carrier profitable again.
Alitalia has had its fair shares of ups and downs – in recent times being rescued from bankruptcy and merging with AirOne in 2008, has had multiple investments ranging from Italian companies to Air France-KLM Group, struggling to make a profit in that time.
Certainly, all parties will have their work cut out to drag Alitalia into profit by 2017.
Etihad will have its work cut out as it continues its expansion and attempting to integrate Alitalia into its family of equity share airlines. Etihad has equity shares in Aer Lingus, airberlin, Air Serbia, Air Seychelles, Jet Airways, Virgin Australia.
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Will they rebrand as “EtiTalia”?!