Etihad Mulls investment In Alitalia

Abu Dhabi’s Etihad Airways is looking at the data room of Alitalia and is expected to take a decision on whether to invest in the troubled Italian carrier by Christmas, two sources familiar with the matter said on Wednesday.

Alitalia has just raised 300 million euros ($413 million) in a drawn-out capital increase which analysts said would keep the loss-making airline in the air for the next six months but it needs to find a strong partner willing to invest in its fleet and making it profitable in the longer term.

“Etihad has been in the data room as of some ten days and will complete the process by the end of this week,” one source said.

Etihad is expected to decide on whether to buy a stake in Alitalia “just before Christmas”, the source added.

Etihad and Alitalia declined to comment.

Not being a European carrier, Etihad can only take a stake of up to 49 per cent in Rome-based Alitalia.

The two airlines were mentioned in the context of a possible tie-up earlier this year, but Etihad said at the time there were no talks beyond those on code sharing.

“An Etihad-led team is looking at numbers of Alitalia and this is not the first time it has done so,” a second source close to Etihad said.

“Etihad’s relationship with Alitalia is deeper than normal code sharing, it is a deep commercial partnership,” the source added, pointing to the fact that the two airlines jointly operated flights between Abu Dhabi and the Italian cities of Rome and Milan.

“Alitalia desperately needs a strong partner and Etihad has been a serious investor (in other airlines).”

The source said, however, that it was not yet clear whether Alitalia could give Etihad the synergies it usually seeks when striking up alliances with other airlines.

The UAE carrier has been aggressively growing its international network over the past 10 years through minority stake purchases and codeshare agreements, as it competes with regional rivals Emirates Airline and Qatar Airways.

Etihad, whose annual net profit tripled in 2012, already holds stakes in Virgin Australia, Air Berlin, Aer Lingus and India’s Jet Airways among others.

Alitalia’s top investor has so far been Air France-KLM , but the Franco-Dutch group has let its 25 per cent stake be diluted to just around seven per cent after it snubbed the cash call, asking for tougher restructuring of Alitalia’s debt.