Etihad close to investment in Alitalia

The two airlines have nearly reached an agreement.

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By :  ,  Financial Analyst

Airline Etihad is reportedly close to doing a deal with Alitalia to make an investment in the struggling Italian airline.

Etihad has been in talks with its fellow airline for a number of weeks as it seeks to come to an arrangement and on Sunday (February 2nd), the two companies said a deal is nearly done.

They have now entered into the final phase of talks regarding an investment by Etihad into Alitalia, but the two companies noted that this could take a further 30 days until it is completed.

Giorgio Squinzi, head of Italy's main employers' group, Confindustria, is among those to have warmly welcomed the news of the impending investment in Alitalia, which has been hit particularly hard by the global financial crash. He said: "A strategic alliance with a strong group that is willing to invest and does not sideline our country is a positive development."

Alitalia chief executive Gabriele Del Torchio said on Sunday that the agreement would be "an important step in creating a solid and competitive Alitalia".

Airline problems

Some 14,000 people are employed by the Italian airline and in recent months it has had to be bailed out by the country's government in order to continue to operate as usual.

In the UK, Etihad is best known for being the main sponsor of Premier League football club Manchester City, lending its name to the team's stadium in the east of Manchester.

Alitalia is believed to have debts of about 800 million euros (£656 million) as a result of the recession and its after-effects, but the firm still carries some 25 million passengers a year.

Etihad has become increasingly dominant in the airline industry over the course of the last few years and the company already has stakes in firms such as Air Berlin, Aer Lingus, and Virgin Australia.

An investment in Alitalia would allow Etihad to strengthen its position in Europe even further. Although no details of the investment have been released, reports claim that the investment could see Etihad buy as much as 40 per cent of Alitalia.

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