Etihad finishes Alitalia Due Diligence



Etihad Airways  has reportedly finished a due diligence for a possible 40 percent investment in Alitalia. Maurizio Lupi , the Italian transport minister told parliament on Wednesday that Etihad could present its industrial plan for the troubled Italian carrier to the government by the end of this week.

The Middle Eastern airline is apparently considering its options which a month ago its’ Chief Executive James Hogan said could swing either way. Etihad has said it will invest in the Italian carrier only if it fits in its network and if Alitalia has a credible plan to return to profit.  If the two sides agree on the plan, an offer from Etihad could reportedly arrive in mid-May. In the meantime, Alitalia’s cash continues to drain at an unsustainable rate and it faces grounding its planes.

Alitalia has only been kept afloat with support from the government and Air France.  Its 2013 rescue package was worth $US688 million. Disagreement over more cash injections saw Air France bow out of the race reducing its shareholding to just four per cent.

The  biggest blocks for a possible investment are:

  1.  Alitalis’s  $US1.24 billion in debt to principally to Intesa Sanpaolo and UniCredit which Etihad wants written down
  2. Union concern at plans by Etihad to insist in a reduction in the 14 000 strong  staff
  3. Lufthansa’s strident objections to the European Union

The question is what will happen to Alitalia and Air Berlin under Etihad influence:

  • merger between the two?
  • some combination of  the two carrier’s international routes?

Will Air Berlin remain in One World or move across to Skyteam?


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  1. Hopefully Etihad now sees that they should run from anything involving Alitalia as fast as possible…

  2. I hope AB stays in 1W, otherwise accessing a lot of the smaller, more interesting places in Europe will be difficult if not impossible with all my AA miles (BAs network is not as good, and the fuel surcharges grrrr)

  3. if you’re a contarian, and Etihad’s investment strategy to buy at a discount market to Europe and lesser degree N America, this could be genius. they’ve made clear they will only acquire Alitalia by throwing our current mgmt and labor contracts — basically what the US airlines have gone thru not that many years back. if you consolidate the non-Euro stations of Air Berlin w/ Alitalia, it is quite a reach, little overlap w/ Eitahad’s current. they would leapfrog over their Arab peers. a double Berlin-Rome hub in Europe reflects a version of the geographic hub distribution of US airlines like Delta that has turned very profitable. the back-door approach can far outway building from scratch.

  4. I wonder how many routes of Air Berlin is taken over by Etihad. At least, from this October the only Air Berlin flight to Thailand (Phuket) will be taken over by Etihad.

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