Etihad Buys 49% Stake in Alitalia

Alitalia and Etihad Airways have agreed the terms of a stake purchase giving the Middle Eastern airline 49 percent of the unprofitable Italian carrier and access to one of Europe’s biggest travel markets.

A statement jointly endorsed by the two airlines  indicates that the airlines will now move to finalise the transactional documents, that will include the agreed upon conditions, as soon as possible.

The conclusion of the investment is subject to final regulatory approvals.  

Etihad will invest about 560 million euros ($762 million) and create a company for Alitalia’s operating assets, said two people familiar with the matter.

The carrier is expected to pay about 400 million euros for the stake and will also buy a majority in the company that runs Alitalia loyalty program, said the people, who asked not to be named as the talks is private.

“It’s clearer and clearer that this marriage has to be done as it is an important industrial investment,” Italian Transport Minister Maurizio Lupi said. “We will meet unions to discuss job cuts.”

Alitalia had sought a new partner after Air France-KLM (AF) Group bowed out of a rescue brokered by the government last year.

The airline has been unprofitable for years and is in the process of cutting thousands of jobs as its domestic market comes increasingly under attack from low-cost airliners and global carriers including Emirates, which services Milan.