Etihad Airways and Alitalia have announced that they have signed the transaction implementation agreement which will result in a €1,758 million investment to build a reinvigorated Alitalia as a competitive, sustainably profitable business.
The recapitalised 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 revitalized 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.
A total of €300 million in new loan facilities have also been extended by Italian financial institutions.
Etihad Airways will take a 49 per cent shareholding in Alitalia, for an investment of €387.5 million.
Its total investment also includes €112.5 million to acquire a 75 per cent 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 December 31st 2014.
Alitalia chairman Roberto Colaninno and Etihad Airways chief executive James Hogan exchange documents today in Rome marking the investment agreement between the two carriers
Etihad Airways chief executive 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.”
Hogan said he recognised that many steps had been taken by current Alitalia shareholders, management and workers to stabilise the business ahead of new investment.
“Alitalia can succeed and it can grow again but it needs to build from solid foundations,” he added.
“We have made it clear from the start that our entire investment should be focused on supporting the implementation of the new business plan, which will see this goal come to fruition.
“The winners from this successful strategy will be Italian and international travellers, who will see better service, new routes and greater competitive choice;
Alitalia’s employees, who can look forward to a brighter future over the long term, in a business which will grow again; and the Italian people, who can be proud once again of their national airline.”
Etihad Airways is considered the World’s Leading Airline by the World Travel Awards.